Question
An upward shift in the consumption function, other things being equal, could be caused by households:
becoming optimistic about the state of the economy.
becoming pessimistic about the state of the economy.
expecting future income and wealth to decline.
None of these.
becoming optimistic about the state of the economy.
becoming pessimistic about the state of the economy.
expecting future income and wealth to decline.
None of these.
Answers
GPT-5 mini
becoming optimistic about the state of the economy.
Explanation: optimism raises expected future income/wealth, increasing autonomous consumption and shifting the consumption function up. Pessimism or expectations of lower future income would shift it down.
Explanation: optimism raises expected future income/wealth, increasing autonomous consumption and shifting the consumption function up. Pessimism or expectations of lower future income would shift it down.