A decrease in wealth ________ consumption expenditure and ________.
A) increases; shifts the consumption function upward
B) decreases; shifts the consumption function downward
C) increases; shifts the consumption function downward
D) decreases; shifts the consumption function upward
E) decreases; results in a movement downward along the consumption function

Question

Quizplus · Accepted Answer

A decrease in wealth would lead to a decrease in consumption expenditure as people have less money to spend. This decrease in consumption expenditure would shift the consumption function downward, as there is now a lower level of consumption expenditure at every level of income.

A Decrease in Wealth ________ Consumption Expenditure and ________

A Decrease in Wealth Consumption Expenditure and