Expectations that the price level will increase in the future will:
A)shift the current consumption function upward.
B)make the current consumption function steeper.
C)make the current consumption function flatter.
D)result in a downward movement along the current consumption function.
E)shift the current consumption function downward.

Question

Quizplus · Accepted Answer

Expectations of future price increases can lead people to spend more now rather than later, anticipating that their money will have less purchasing power in the future. This behavior shifts the current consumption function upward as consumers decide to consume more at present.

Expectations That the Price Level Will Increase in the Future