Question

In an economy, decision regarding consumption is made by which sector?

• A. Household sector
• B. Government sector
• C. Business sector
• D. None of these

Hint:

In an economy, the household sector is responsible for decisions regarding consumption and saving.

Answer 1

The Correct Option is A

Step 1: Understanding the concept of decision-making in an economy.
In an economy, decisions regarding consumption, savings, and other financial matters are primarily made by the household sector. This is because households are the main consumers of goods and services, making decisions based on their preferences, income, and needs.

Step 2: Analyzing the options.
(A) Household sector: Correct. The household sector makes the primary decisions regarding consumption and savings in an economy.
(B) Government sector: The government influences the economy but does not directly make consumption decisions for households. It sets policies that can affect household behavior, but the primary decisions are made by households.
(C) Business sector: The business sector is involved in production and supply of goods and services but not in the direct consumption decisions.
(D) None of these: This option is incorrect, as the correct answer is (A) Household sector.

Step 3: Conclusion.
The correct answer is (A) Household sector because the household sector makes decisions regarding consumption based on its income and preferences.