Expectations that disposable income will increase in the future will _____.
A)shift the current consumption function upward
B)shift the current consumption function downward
C)result in an upward movement along the current consumption function
D)make the current consumption function flatter
E)make the current consumption function steeper

Question

Quizplus · Accepted Answer

If disposable income is expected to increase in the future, households will be more willing to consume now, knowing that they will have more income available in the future. This will shift the current consumption function upward, indicating that at any given level of income, households will consume more.

Expectations That Disposable Income Will Increase in the Future Will