Read each situation and determine whether the consumer would most likely spend more or save more. Estella just got a raise from her employer. Many people at Isabella’s company have gotten laid off recently. Gil is confident in overall market conditions. The prices of homes in Amir’s neighborhood are declining. Riley wants to buy a new car within the next yea

Estella just got a raise from her employer. SPEND MORE.

Estella will most probably spend more all else being equal because she will have more money to spend now that she has a raise.

Many people at Isabella’s company have gotten laid off recently. SAVE MORE.

Isabella will most probably be worried that since many people have been laid off, there is a chance the company will fire Isabella too. Isabella will therefore most likely save more so that the savings will provide a net to fall back on in case Isabella is laid off.

Gil is confident in overall market conditions. SPEND MORE.

With Gil being more confident in the market, they will feel confident to spend more because they will feel as though the positive market conditions will give them enough returns to cater for the new expenses.

The prices of homes in Amir’s neighborhood are declining. SAVE MORE.

The prices of homes in Amir's neighborhood depreciating means that Amir will not be able to rely on as much money as before should they have to sell the house. They will therefore save more so as to ensure a better net in case things go bad.

Riley wants to buy a new car within the next year. SAVE MORE.

Riley will save more so that they can be able to afford the car they want in the coming year.

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