Which of the Following Would Unambiguously Increase Consumption Spending

question 111

Multiple Choice

Which of the following would unambiguously increase consumption spending?

• A) an increase in real disposable income coupled with a decrease in real wealth
• B) an increase in real wealth coupled with more pessimistic expectations regarding future income
• C) a decrease in real disposable income coupled with a decrease in the interest rate
• D) a decrease in the interest rate coupled with an increase in real wealth
• E) increased pessimism regarding future income coupled with an increase in the interest rate

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Definitions:

Profitability Ratios

A group of ratios that show the combined effects of liquidity, asset management, and debt on operations.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Asset Management

The process of overseeing and optimizing the performance of a set of assets in a way that aligns with the investor's objectives.

Seasonal

Pertaining to changes, fluctuations, or patterns that occur at specific times of the year or in specific seasons, often due to changes in weather, holidays, or business cycles.