Permanent income has no effect on saving. 

Permanent income has smaller effect on consumption than temporary income.

Permanent income is your average lifetime income. 

Permanent income is constant. 

decreases saving and decreases consumption. 

increases saving and decreases consumption.

increases saving and increases consumption.

decreases saving and increases consumption.

This is shown as a movement along the consumption function. 

so the marginal propensity to consume is negative. 

The consumption function is downward sloping. 

and saving decrease as income increases. 

precautionary savings will decrease and consumption will go up. 

precautionary savings will decrease and consumption will go down. 

precautionary savings will increase  and consumption will go down. 

precautionary savings will increase and consumption will go up. 

Figure C

Figure B

Figure D

Figure A