When the aggregate consumption function is defined as C = C? + cYD, then
A)the mpc increases with higher levels of disposable income
B)the mpc is constant at all levels of disposable income
C)the apc is constant at all levels of disposable income
D)the apc increases with higher levels of disposable income
E)the expenditure multiplier is less than one

Question

Quizplus · Accepted Answer

In the equation C = C? + cYD, c represents the marginal propensity to consume (MPC), which is the change in consumption resulting from a one-unit change in disposable income. Since c is a constant, the MPC is also constant at all levels of disposable income.

When the Aggregate Consumption Function Is Defined as C =