Which of the following events would likely cause the largest reduction in current consumption?
A)a permanent reduction in annual salary of $2000
B)a one-time tax increase of $4000
C)a one-time reduction in income (e.g. a bonus)of $4000
D)both B and C

Question

Quizplus · Accepted Answer

A permanent reduction in annual salary of $2000 would likely cause the largest reduction in current consumption because it affects the individual's income on an ongoing basis, leading to a more significant and sustained impact on their budget and spending habits compared to one-time changes.

Which of the Following Events Would Likely Cause the Largest