Expectations that the price level will increase in the future will
A)shift the current consumption function upward
B)make the current consumption function steeper
C)make the current consumption function flatter
D)result in a movement downward along the current consumption function
E)have no effect on the current consumption function

Question

Quizplus · Accepted Answer

When people expect the price level to increase in the future, they may increase their current consumption in order to avoid paying higher prices later. This will shift the current consumption function upward.

Expectations That the Price Level Will Increase in the Future