The slope of the consumption function is
A) equal to the MPC and is equal to 1.
B) equal to the MPC and is greater than 1.
C) equal to the MPC and is less than 1.
D) not equal to the MPC and is less than 1.
E) not equal to the MPC and is equal to 1.

Question

Quizplus · Accepted Answer

The slope of the consumption function is equal to the marginal propensity to consume (MPC), which is the change in consumption resulting from a change in income. The MPC is typically less than 1 because not all additional income will be spent on consumption; some of it will be saved.

The Slope of the Consumption Function Is