Which of the following is a feature of the 'Relative Income Hypothesis' of consumption associated with Duesenberry?
A. Consumption depends on an individual’s income relative to the incomes of others and on past peak income
B. Only permanent income matters
C. Consumption is independent of social comparisons
D. Consumption depends only on absolute current income
Answer: Option A
Solution (By JKSSB Mock Tests)
Duesenberry’s relative-income hypothesis posits that consumption depends on the individual’s rank in the income distribution and on the highest income previously attained (ratchet effect).
Explanation:
The primary objective of monetary policy in India is to maintain price stability while keeping in mind the objective of growth, along with ensuring financial stability.
Explanation:
Framing effects occur when logically equivalent descriptions of the same decision problem lead to different choices, violating the invariance assumption of standard rational-choice theory.
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