The reverse wealth effect will cause the consumption schedule to:
A)shift upward.
B)shift downward.
C)not change at all.
D)shift in the same direction as would occur with the wealth effect.

Question

Quizplus · Accepted Answer

The reverse wealth effect describes the phenomenon where consumers decrease spending due to a decrease in wealth or a decrease in the value of assets. This means that the consumption schedule shifts downward, as consumers reduce their spending at all levels of income. This is the opposite of the wealth effect, which causes an upward shift in the consumption schedule when wealth increases.

The Reverse Wealth Effect Will Cause the Consumption Schedule To