A downward shift in the consumption function can be caused by
A) expectations of product shortages.
B) expectations of more income in the future.
C) a decrease in consumer confidence.
D) rising property values that increases households' net worth.

Question

Quizplus · Accepted Answer

A decrease in consumer confidence can lead to a decrease in consumption as consumers may become more cautious and reduce their spending. Expectations of product shortages or more income in the future may actually lead to an increase in consumption, while rising property values may increase households' wealth, leading to an increase in consumption or at least no change in the consumption function.

A Downward Shift in the Consumption Function Can Be Caused