The most important determinant of consumer spending is
A) the level of household borrowing.
B) consumer expectations.
C) the stock of wealth.
D) the level of income.

Question

Quizplus · Accepted Answer

The level of income is the most important determinant of consumer spending because it determines the amount of resources available for spending. As income increases, consumers tend to spend more, and as income decreases, they tend to spend less. While other factors such as consumer expectations and the stock of wealth can also influence spending, they are typically secondary to the level of income. Household borrowing can also influence spending in the short term, but in the long term, it is unlikely to be sustainable if income does not increase accordingly.

The Most Important Determinant of Consumer Spending Is