If people expect the economy to do well in the future, they will increase their consumption today at every price level.

Question

Quizplus · Accepted Answer

When people are optimistic about the future state of the economy, they tend to increase their spending and consumption today because they anticipate having more resources and income in the future. This leads to an increase in demand for goods and services across all price levels, as people are willing to pay more for the products they desire.

If People Expect the Economy to Do Well in the Future