Answer the question on the basis of the following consumption schedules.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the given data.A $2 billion increase in consumption at each level of DI could be caused by:
A) a decrease in consumer wealth.
B) new expectations of higher future income.
C) an increase in taxation.
D) an increase in saving.

Question

Answer the question on the basis of the following consumption schedules.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.  Refer to the given data.A $2 billion increase in consumption at each level of DI could be caused by:
A) a decrease in consumer wealth. 
B) new expectations of higher future income. 
C) an increase in taxation. 
D) an increase in saving.

Quizplus · Accepted Answer

A $2 billion increase in consumption at each level of DI suggests a shift in the consumption schedule upwards, which can be caused by a positive change in consumer expectations of future income. A decrease in consumer wealth or an increase in taxation would likely shift the consumption schedule downwards, while an increase in saving would indicate a leftward shift in the consumption schedule. Therefore, option B is the best choice.

Answer the Question on the Basis of the Following Consumption