An increase in wealth will
A)increase consumption and saving at each level of income
B)increase saving and decrease consumption at each level of income
C)decrease consumption and saving at each level of income
D)increase consumption and decrease saving at each level of income
E)have no effect on consumption,since consumption is a function of income

Question

Quizplus · Accepted Answer

Increase in wealth leads to an increase in disposable income which would result in higher consumption as well as a decrease in the need for saving. Therefore, option D is the most appropriate.

An Increase in Wealth Will