What type of relationship exists between expected future income and consumption?
A) Negative
B) Positive
C) Indirect
D) Constant

Question

Quizplus · Accepted Answer

The relationship between expected future income and consumption is positive. When people expect that their income will increase in the future, they tend to increase their current consumption as well to maintain their standard of living. Conversely, when people expect their future income to decrease, they tend to reduce their current consumption. This is known as the income-consumption relationship.

What Type of Relationship Exists Between Expected Future Income and Consumption