If people's expectations about future income improve so they think their future income will be higher than previously believed, then the AD curve
A)will shift rightward because people will increase spending now.
B)will not change until income actually rises.
C)and the AS curve will both shift leftward because people will increase their saving.
D)will shift leftward because people will spend less now.
E)will not shift but potential GDP will increase.

Question

Quizplus · Accepted Answer

When people expect higher future income, they are likely to increase their current spending, leading to a rightward shift in the Aggregate Demand (AD) curve.

If People's Expectations About Future Income Improve So They Think