Households will choose to save more if
A)expected future income decreases.
B)current disposable income increases.
C)current disposable income decreases.
D)Both A and B are correct.
E)Both A and C are correct.

Question

Quizplus · Accepted Answer

Both A and B are correct. Households tend to save more if they expect their future income to decrease, as a precautionary measure. Similarly, if current disposable income increases, households may allocate a portion of the additional income to savings, especially if their current consumption needs are already met.

Households Will Choose to Save More If