The figure given below shows the consumption functions of an economy.
Figure 9.4

-Refer to Figure 9.4. Which of the following could explain a downward shift of the consumption function from C1 to C3?
A) An increase in household wealth
B) A decrease in the proportion of young people in the population
C) An increase in the size of the population
D) A decrease in consumer confidence
E) An autonomous decrease in saving

Question

The figure given below shows the consumption functions of an economy.
Figure 9.4
 
-Refer to Figure 9.4. Which of the following could explain a downward shift of the consumption function from C1 to C3?
A) An increase in household wealth 
B) A decrease in the proportion of young people in the population 
C) An increase in the size of the population 
D) A decrease in consumer confidence 
E) An autonomous decrease in saving

Quizplus · Accepted Answer

A decrease in consumer confidence would lead to a decrease in consumption expenditure at every level of income, which would shift the consumption function downward from C1 to C3.

The Figure Given Below Shows the Consumption Functions of an Economy