A shift in the consumption function:
A) is based on the marginal propensity to consume.
B) can be caused by a change in the price level.
C) can be caused by a change in GDP.
D) cannot be caused by a change in expectations.

Question

Quizplus · Accepted Answer

A shift in the consumption function can indeed be caused by a change in the price level, as this affects consumers' real purchasing power and thus their consumption choices. Changes in the marginal propensity to consume, GDP, or expectations typically result in movements along the consumption function rather than shifts of the function itself.

A Shift in the Consumption Function