If the consumption function shifts downward, which of the following is the most likely cause?
A)Consumers become more optimistic.
B)The price level increased.
C)Consumers' incomes increase.
D)Real interest rates decrease.

Question

Quizplus · Accepted Answer

An increase in the price level can reduce the real purchasing power of consumers, leading to a downward shift in the consumption function.

If the Consumption Function Shifts Downward, Which of the Following