Analyse the eff ects of income distribution and a change in the holding of fi nancial assets on consumption.    ‘Th e basic principle of absolute income hypothesis is that the individual consumer will...

Analyse the eff ects of income distribution and a change in the holding of fi nancial assets on consumption.

 ‘Th e basic principle of absolute income hypothesis is that the individual consumer will determine the fraction of his

current income that he will allocate to consumption on the basis of his absolute income level.’ Comment.