(Answered) what is the relationship between consumption and wage assuming a changwhat is the relationship…

➤ How do temporary and permanent wage changes differently affect consumption?
Temporary wage changes lead to modest consumption shifts; households often save or smooth spending. Permanent wage increases trigger larger responses under the Permanent Income and Life-Cycle hypotheses, because consumers adjust lifetime income expectations and raise planned spending. MPC out of permanent income is higher than for transitory income.