Expectations that the price level will decrease in the future will
A)make the current consumption function flatter
B)shift the current consumption function downward
C)result in a movement upward along the current consumption function
D)result in a movement downward along the current consumption function
E)make the current consumption function steeper

Question

Quizplus · Accepted Answer

If people expect prices to decrease in the future, they may reduce current consumption in anticipation of lower prices, leading to a downward shift in the current consumption function.

Expectations That the Price Level Will Decrease in the Future