A Reduction in an Individual's Future Income Will Cause

question 67

Multiple Choice

A reduction in an individual's future income will cause:

• A)consumption to fall in both time periods because consumption in both years are normal goods.
• B)a fall in consumption in the future period but not the current period since the price of future consumption relative to current consumption did not change.
• C)consumption to fall in the future period and rise in the current period as the consumer substitutes more current consumption for the future consumption.
• D)an increase in current consumption if interest rates are high enough to induce consumption.

---

Definitions:

Low Buyer Power

A market condition where buyers have limited influence over prices or terms due to high supplier concentration or the lack of alternatives.

Low Supplier Power

Refers to a market condition where suppliers have little control over the pricing and terms of sales, giving buyers greater bargaining power.

Strategy

A plan of action designed to achieve a long-term or overall aim, often involving tactical and operational decision-making.

Resources and Capabilities

The tangible and intangible assets that a firm utilizes to develop, manufacture, and deliver products or services to its customers.