All else being equal, if consumption rises as a share of GDP, then
A)future consumption will fall.
B)people must be saving more.
C)there must have been an increase in GDP.
D)people must have experienced an increase in wealth.
E)there will be less available to consume in the future.

Question

Quizplus · Accepted Answer

If consumption rises as a share of GDP, it means that people are spending a larger share of their income on goods and services. This can be the result of an increase in wealth, such as higher wages or profits. Therefore, the correct answer is D, which implies that people must have experienced an increase in wealth. None of the other choices adequately explain why consumption is rising, or they are incorrect statements.

All Else Being Equal, If Consumption Rises as a Share