Along the consumption function,an increase in disposable income will:
A)cause autonomous consumption to rise.
B)shift the consumption function upward.
C)cause a corresponding downward shift of the saving function.
D)cause a movement along the given consumption function.
E)shift the consumption function downward.

Question

Quizplus · Accepted Answer

An increase in disposable income will cause a movement along the given consumption function, as it represents a movement from one point on the curve to another point on the same curve. The slope of the consumption function remains constant, meaning that the marginal propensity to consume (MPC) does not change. The other choices are not accurate because an increase in disposable income does not necessarily cause autonomous consumption to rise, shift the consumption function upward or downward or cause a corresponding downward shift of the saving function.

Along the Consumption Function,an Increase in Disposable Income Will