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

Question

Quizplus · Accepted Answer

Expectations of future price decreases lead consumers to delay purchases, anticipating lower prices ahead. This behavior effectively reduces current consumption at all income levels, shifting the current consumption function downward.

Expectations That the Price Level Will Decrease in the Future