Which component of consumption has a negative or indirect relationship with consumption?
A) Expected future income
B) Real income
C) Wealth
D) Interest rates

Question

Quizplus · Accepted Answer

Interest rates have a negative relationship with consumption, meaning that as interest rates increase, consumption decreases. This is because higher interest rates increase the cost of borrowing, making it less attractive to consumers.

Which Component of Consumption Has a Negative or Indirect Relationship