Which of the following events will make the consumption function steeper?
A) an increase in real GDP
B) an increase in disposable income
C) an increase in the marginal propensity to consume
D) an increase in unplanned inventory investment

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to consume means that for every additional unit of disposable income, people will spend more. This will make the consumption function steeper, as the increase in consumption will be greater for any given increase in income.

Which of the Following Events Will Make the Consumption Function