Most people base their current consumption spending at least partially on
A)short-run debt.
B)long-run debt.
C)long-run real interest rates.
D)long-run income.

Question

Quizplus · Accepted Answer

Long-run income is the most significant factor that determines current consumption spending. People's tendency to spend more when their income increases is known as the income effect. Long-run debt and real interest rates may have some impact on consumption, but they are not as significant as income in determining spending behavior. Short-run debt is unlikely to have a significant impact on consumption spending in the long run.

Most People Base Their Current Consumption Spending at Least Partially