Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.Refer to the data below.Suppose the consumption is increased by $2 billion in each of the three economies.This change could have been caused by:
A)a decrease in consumer wealth.
B)expectations of higher future income.
C)an increase in taxation.
D)an increase in saving.

Question

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.Refer to the data below.Suppose the consumption is increased by $2 billion in each of the three economies.This change could have been caused by: 
A)a decrease in consumer wealth. 
B)expectations of higher future income. 
C)an increase in taxation. 
D)an increase in saving.

Quizplus · Accepted Answer

An increase in consumption could be caused by expectations of higher future income, as individuals may feel more confident in their ability to spend more money as their income increases. Other options such as a decrease in consumer wealth or an increase in taxation would likely lead to a decrease in consumption, while an increase in saving would also decrease consumption rather than increasing it.

Following Is Consumption Schedules for Three Private Closed Economies