Which of the following is a reason that consumption depends on current income,and not just on total wealth?
A)Banks will not always lend money to those who want to consume more than their income.
B)The anticipation of future financial distress makes some people reluctant to borrow.
C)Low income people may prefer to postpone some consumption until later years, when their incomes are higher.
D)all of the above
E) none of the above

Question

Quizplus · Accepted Answer

A) Banks typically have lending criteria that require borrowers to have sufficient income to repay the loan, so consumption cannot exceed income.
B) Concerns about future financial difficulties may lead individuals to save money rather than borrowing, reducing their current consumption.
C) For low-income individuals, it may be advantageous to save some income to invest or pay for necessary expenses in the future, rather than spending it all now.

Which of the Following Is a Reason That Consumption Depends