Everything else remaining the same, if Canadians expect future disposable income to rise, then
A)Canada's consumption function shifts downward.
B)Canada's consumption function shifts upward.
C)a movement occurs up along Canada's consumption function.
D)a movement occurs down along Canada's consumption function.
E)Canada's saving function shifts upward.

Question

Quizplus · Accepted Answer

When Canadians expect future disposable income to rise, it means that they are optimistic about their future income levels which, in turn, will provide them with more disposable income to spend. This optimism will lead to an increase in their current consumption and a shift of the consumption function upward. Therefore, choice B is the correct answer.

Everything Else Remaining the Same, If Canadians Expect Future Disposable