Let "C = Ca + by" define the consumption function. The term "b" is known as
A) autonomous consumption.
B) induced consumption.
C) the marginal propensity to consume.
D) the marginal propensity to save.

Question

Quizplus · Accepted Answer

The term "b" is the marginal propensity to consume, which measures the change in consumption that results from a change in income. Choices A andB are incorrect as they do not correspond to the definition of "b". Choice D is also incorrect as it refers to the marginal propensity to save, which is different from the term defined in the question.

Let "C = Ca + By" Define the Consumption Function