The consumption share line is very sensitive to changes in inflation.

Question

Quizplus · Accepted Answer

The consumption share line, which represents the proportion of income spent on consumption, is primarily influenced by changes in income and consumer preferences rather than directly by inflation. Inflation can indirectly affect consumption patterns through its impact on real income and purchasing power, but the consumption share line itself is not directly sensitive to inflation changes.

The Consumption Share Line Is Very Sensitive to Changes in Inflation