Which of the propositions of the past income hypothesis of Duesenberry are correct ? Choose from the…

According to James Duesenberry's Relative (and Past Peak) Income Hypothesis: - Statement I is true: Current consumption depends not only on current income, but also on past peak income. - Statement II is true: There is an asymmetrical relationship between income and consumption during cyclical contractions versus expansions (the ratchet effect). - Statement III is true: Because households resist reducing their accustomed standard of living when income falls, the short-run consumption-income relationship is irreversible over time. - Statement IV is true when comparing the two phases of the cycle: during a depression, households defend their consumption standards by reducing saving, so consumption falls less than proportionally to income (moving along a flat short-run consumption curve); during a subsequent expansion (once income surpasses its previous peak), consumption rises much more strongly along the steeper long-run consumption function than it fell during the contraction. Thus, all four statements are true .