Everything else remaining the same, a decrease in expected future income ________ current consumption expenditure and ________ saving.
A)increases; increases
B)increases; decreases
C)decreases; increases
D)decreases; decreases
E)does not change; does not change

Question

Quizplus · Accepted Answer

A decrease in expected future income reduces the desire to spend and increases the motivation to save. Thus, current consumption expenditure will decrease and saving will increase.

Everything Else Remaining the Same, a Decrease in Expected Future