Which of the following statements is most accurate?
A) Most of the variation in consumption spending can be explained by changes in the interest rate.
B) Most of the variation in consumption spending can be explained by changes in disposable income.
C) Most of the variation in consumption spending can be explained by changes in wealth.
D) Most of the variation in consumption spending can be explained by changes in debt.
E) There is no single factor that explains much of the variation in consumption spending.

Question

Quizplus · Accepted Answer

The most accurate statement is that most of the variation in consumption spending can be explained by changes in disposable income. This is because disposable income is the primary determinant of how much households have available to spend on consumption. While changes in the interest rate, wealth, and debt levels may also influence consumption spending, they are generally secondary factors. Nevertheless, there is no single factor that can fully explain all of the variation in consumption spending since there are other factors such as personal preferences, expectations about future income, and demographic changes that may also play a role.

Which of the Following Statements Is Most Accurate