If the percentage of change in total spending (C + G ) is lower than the percentage change in income, an economy has some degree of:
A) financial autonomy.
B) consumption smoothing.
C) imminent recession.
D) prosperity.

Question

Quizplus · Accepted Answer

If the percentage change in income is higher than the percentage change in total spending (C+G), it suggests that individuals are saving a higher percentage of their income instead of spending it all. This behavior is indicative of consumption smoothing, where individuals tend to save money during high-income periods to be able to maintain their consumption levels during low-income periods. This behavior helps to stabilize the economy during fluctuations in income or other economic shocks.

If the Percentage of Change in Total Spending (C