Assuming all else equal,if households are optimistic about their future income,it is likely to cause a(n)________.

Question

Quizplus · Accepted Answer

When households are optimistic about their future income, they are more likely to borrow more, anticipating that they will have more income in the future to pay off their debts. This optimism increases the demand for credit at every interest rate, leading to a rightward shift of the credit demand curve.

Assuming All Else Equal,if Households Are Optimistic About Their Future