If consumers experience an increase in lifetime income, current spending will ________, current saving will ________, and future spending will ________.
A) increase; increase; increase
B) increase; decrease; decrease
C) increase; decrease; increase
D) increase; increase; decrease
E) decrease; increase; increase

Question

Quizplus · Accepted Answer

When consumers experience an increase in lifetime income, they tend to increase their current spending due to higher perceived wealth. They also increase their current saving to maintain a higher level of future consumption, leading to an increase in future spending as well.

If Consumers Experience an Increase in Lifetime Income, Current Spending