Refer to the information provided in Figure 23.2 below to answer the question(s) that follow. Figure 23.2 -Refer to Figure 23.2. Suppose Jerry's MPC increases, and the vertical intercept of the consumption function does not change. At income Y₁, Jerry's A) consumption will be greater than his income. B) consumption will be less than his income. C) saving will be zero. D) all of the above.

Question

Quizplus · Accepted Answer

If Jerry's marginal propensity to consume (MPC) increases, it means he will consume a larger portion of any additional income. Since the vertical intercept (autonomous consumption) does not change, at income Y1, his consumption will exceed his income, leading to dissaving.

Refer to the Information Provided in Figure 23