A decrease in a transfer payment to Herbert (like his Social Security Check) wil

Question

A decrease in a transfer payment to Herbert (like his Social Security Check) will: A) decease consumption spending B) compensate for his risk-taking with Chris C) make market decisions harder D) increase consumption spending A decrease in a transfer payment to Herbert (like his Social Security Check) will: A) decease consumption spending B) compensate for his risk-taking with Chris C) make market decisions harder D) increase consumption spending A) decease consumption spending B) compensate for his risk-taking with Chris C) make market decisions harder D) increase consumption spending

Explanation / Answer

Ans is A

because decrease in transfer will decreases the disposable income and we know Consumption is directly related to disposable income. Thus decrease in disposable income decreases the consumption spending.

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