Which of the following would be most likely to increase consumption spending?
A) A higher interest rate
B) A drop in stock prices
C) A reduction in consumer credit card debt
D) The expectation of lower future prices
E) An increase in the income tax rate.

Question

Quizplus · Accepted Answer

A reduction in consumer credit card debt would free up more disposable income for consumers to spend, leading to an increase in consumption spending. Choices A, B, and D would likely decrease consumption spending as they discourage consumer confidence and/or lead to reduced disposable income. Choice E may also decrease consumption spending as consumers have less disposable income to spend.

Which of the Following Would Be Most Likely to Increase