Suppose the stock market rises, causing a rapid increase in consumers' wealth.This would lead to
A)a downward movement along the consumption function.
B)a downward shift of the consumption function.
C)an upward movement along the consumption function.
D)an upward shift of the consumption function.

Question

Quizplus · Accepted Answer

An increase in consumers' wealth due to a rising stock market would lead to an increase in consumption at all levels of income, which is represented by an upward shift of the consumption function, not just a movement along it.

Suppose the Stock Market Rises, Causing a Rapid Increase in Consumers