A household that expects a decrease in disposable income in the future will _____.
A)increase its current consumption spending
B)decrease its current consumption spending
C)maintain its current consumption spending
D)first increase its current consumption spending and then decrease spending when income falls
E)first decrease its current consumption spending and then increase spending when income falls

Question

Quizplus · Accepted Answer

If a household expects a decrease in disposable income in the future, it is likely to decrease its current consumption spending in order to prepare for the expected lower income.

A Household That Expects a Decrease in Disposable Income in the Future