Households will choose to save more if
A) income is expected to decrease in the future.
B) current disposable income increases.
C) Both answers A and B are correct.
D) Neither answer A nor B is correct.

Question

Quizplus · Accepted Answer

Both A and B are correct because households tend to save more when they anticipate a decrease in future income to prepare for tougher times ahead, and they also tend to save more when their current disposable income increases, as they have more available resources to put aside for future use.

Households Will Choose to Save More If