If an economist wants to make a prediction about the effects of a change in disposable income on the change in consumption spending based on historical data, she must assume that
A)the future will closely resemble the past.
B)consumption and disposable income will be negatively related.
C)the consumption function will have a downward slope.
D)as disposable income increases, consumer spending will remain constant.

Question

Quizplus · Accepted Answer

To make predictions based on historical data, economists generally assume that the future will closely resemble the past. This is not a guarantee, but it is a reasonable assumption that allows for more accurate predictions. The other answer choices are not relevant to this assumption.

If an Economist Wants to Make a Prediction About the Effects