There is a movement along the consumption function if there is ___________.
A) an increase in the expected future income
B) a decrease in the real interest rate
C) an increase in autonomous consumption
D) an increase in disposable income

Question

Quizplus · Accepted Answer

The consumption function represents the relationship between disposable income and consumption. Disposable income is the income that households have available for consumption after taxes and other mandatory deductions have been taken out. Therefore, an increase in disposable income will result in an increase in consumption and a movement along the consumption function. Choices A, B, and C will shift the consumption function, but will not result in a movement along the existing function.

There Is a Movement Along the Consumption Function If There