Which of the following will reduce consumer expenditures?
A)a decrease in interest rates
B)a general increase in housing prices
C)a decrease in expected future income
D)a decrease in the price level

Question

Quizplus · Accepted Answer

If consumers expect a decrease in their future income, they are likely to reduce their spending in order to save more money as a precautionary measure. This will lead to a decrease in overall consumer expenditures. A decrease in interest rates and price levels may actually encourage consumers to spend more, while a general increase in housing prices may have no effect on consumer expenditures.

Which of the Following Will Reduce Consumer Expenditures