If Consumers Experience an Increase in Lifetime Income, Current Spending

question 41

Multiple Choice

If consumers experience an increase in lifetime income, current spending will ________, current saving will ________, and future spending will ________.

• A) increase; increase; increase
• B) increase; decrease; decrease
• C) increase; decrease; increase
• D) increase; increase; decrease
• E) decrease; increase; increase

---

Definitions:

Straight-Line Method

This is a method of allocating the cost of an asset evenly over its useful life.

Depreciation Expense

Expense allocated for the reduction in value of tangible assets over their useful life for accounting and tax purposes.

Estimated Residual Value

The anticipated value of an asset at the end of its useful life.

Obsolescence

The process through which a product or technology becomes outdated and no longer used, often due to advancements or changes in consumer preferences.