If the consumption function is given by C = 150 + 0.85Y and Y increases by 1 unit, then C increases by:
A)0.15 unit.
B)0.5 unit.
C)0.85 unit.
D)1 unit.

Name: If the consumption function is given by C = 150 + 0.85Y and Y increases by 1 unit, then C increases by: A)0.15 unit. B)0.5 unit. C)0.85 unit. D)1 unit.
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Question

Quizplus · Accepted Answer

According to the consumption function, for every 1 unit increase in income (Y), consumption (C) will increase by 0.85 units. Therefore, the correct answer is C) 0.85 unit.

If the Consumption Function Is Given by C = 150