The figure given below shows the consumption function of a household.?Figure 9.2

-In Figure 9.2, a decrease in disposable income would be illustrated by:
A) an upward shift of the consumption function.
B) a downward shift of the consumption function.
C) a leftward movement along the consumption function.
D) a rightward movement along the consumption function.
E) a movement from point A to point D.

Question

The figure given below shows the consumption function of a household.?Figure 9.2
 
-In Figure 9.2, a decrease in disposable income would be illustrated by:
A) an upward shift of the consumption function. 
B) a downward shift of the consumption function. 
C) a leftward movement along the consumption function. 
D) a rightward movement along the consumption function. 
E) a movement from point A to point D.

Quizplus · Accepted Answer

A decrease in disposable income results in a leftward movement along the consumption function, as it represents a decrease in the amount of income available for consumption, leading to less consumption at each level of income.

The Figure Given Below Shows the Consumption Function of a Household.?Figure