Why consumers tend to purchase less if they have less wealth (or more debt), even if their income remains constant?
A) Consumers are irrational.
B) Consumers may feel richer, so they increase their savings in order to emulate the wealthy.
C) Consumers may feel poorer, so they want to increase their savings.
D) Consumers may already have bought all they want.

Question

Quizplus · Accepted Answer

When consumers have less wealth or more debt, they may feel poorer and less secure financially. This can cause them to prioritize increasing their savings over spending money on non-essential items. Additionally, they may want to build up their savings in case of unexpected expenses or emergencies. This behavior is rational and can be seen as a form of precautionary savings.

Why Consumers Tend to Purchase Less If They Have Less