Refer to Figure a.Assuming the solid line in the graph is a constant expected consumption line where Π (the probability of state S)= 0.50,which constant expected consumption line reflects an increase in Π?
A) The dotted line
B) The dashed line
C) An increase in Π does not result in a change in the expected consumption line.
D) A change in Π results in a parallel shift in the expected consumption line, so neither the dotted nor the dashed line reflects this change.

Question

Refer to Figure a.Assuming the solid line in the graph is a constant expected consumption line where Π (the probability of state S)= 0.50,which constant expected consumption line reflects an increase in Π? 
A) The dotted line 
B) The dashed line 
C) An increase in Π does not result in a change in the expected consumption line. 
D) A change in Π results in a parallel shift in the expected consumption line, so neither the dotted nor the dashed line reflects this change.

Quizplus · Accepted Answer

The Answer of Refer to Figure a.Assuming the solid line in the graph is a constant expected consumption line where Π (the probability of state S)= 0.50,which constant expected consumption line reflects an increase in Π? 
A) The dotted line 
B) The dashed line 
C) An increase in Π does not result in a change in the expected consumption line. 
D) A change in Π results in a parallel shift in the expected consumption line, so neither the dotted nor the dashed line reflects this change.

Refer to Figure A