Which of the following is a reason that consumption depends on current income, and not just on total wealth?
A) The anticipation of future financial distress makes some people reluctant to borrow.
B) Low income people may prefer to postpone some consumption until later years, when their incomes are higher.
C) Banks will not always lend money to those who want to consume more than their income.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

All the options provided are reasons why consumption depends on current income rather than just on total wealth. A) highlights the reluctance to borrow due to the anticipation of future financial distress, B) suggests a preference to postpone consumption for future higher income periods, and C) points out the limitations in borrowing from banks to finance consumption beyond current income.

Which of the Following Is a Reason That Consumption Depends