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

Question

Quizplus · Accepted Answer

A permanent increase in annual salary is likely to cause the largest increase in current consumption because it affects the consumer's lifetime income, leading to a more significant change in consumption patterns compared to one-time changes.

Which of the Following Events Would Likely Cause the Largest