In the consumption function C = Ca + bY, the term Ca represents:
A) the marginal propensity to consume.
B) the marginal propensity to save.
C) the multiplier effect.
D) the autonomous consumption spending.

Question

Quizplus · Accepted Answer

Ca represents the autonomous consumption spending, which is the level of consumption that is independent of income. It includes the consumption spending that households make regardless of their income level, such as spending for basic necessities like food and shelter.

In the Consumption Function C = Ca + BY, the Term