Which of the following is inversely related to consumption spending?
A) Wealth
B) Interest rates
C) Disposable income
D) Optimism about future income
E) None of the above.

Question

Quizplus · Accepted Answer

Interest rates and consumption spending have an inverse relationship. When interest rates are high, borrowing becomes more expensive, and people tend to spend less. When interest rates are low, borrowing is cheaper, and people tend to spend more. Wealth, disposable income, and optimism about future income generally have a positive relationship with consumption spending.

Which of the Following Is Inversely Related to Consumption Spending