What is the effect on the consumption function of an increase in disposable income?
A)The consumption function shifts upward.
B)The consumption function shifts downward.
C)There is movement upward along the consumption function.
D)There is movement downward along the consumption function.
E)The consumption function becomes steeper.

Question

Quizplus · Accepted Answer

An increase in disposable income leads to a movement upward along the consumption function, as consumers tend to spend more when they have more income.

What Is the Effect on the Consumption Function of an Increase