If consumers expect prices to rise and shortages to occur in the future, then there will be a shift
A)upward of both the consumption and saving schedules.
B)downward of both the consumption and saving schedules.
C)of the consumption schedule upward and of the saving schedule downward.
D)of the consumption schedule downward and the saving schedule upward.

Question

Quizplus · Accepted Answer

If consumers expect prices to rise and shortages to occur, they are likely to increase their current consumption to avoid higher future prices, shifting the consumption schedule upward. Simultaneously, they may reduce their savings to finance this increased consumption, shifting the saving schedule downward.

If Consumers Expect Prices to Rise and Shortages to Occur