During economic fluctuations

Question

Quizplus · Accepted Answer

During economic fluctuations, changes in income have a large effect on consumption. When income decreases, households tend to reduce their consumption as a way to maintain their savings and balance their budgets. On the other hand, when income increases, households tend to increase their consumption, especially on non-necessary goods and services. Therefore, changes in income are a major factor affecting consumption during economic fluctuations.

During Economic Fluctuations