All of the following shift the consumption function upward EXCEPT
A) an increase in wealth.
B) a decrease in the rate of interest.
C) an increase in income.
D) an expectation of better economic conditions.

Question

Quizplus · Accepted Answer

An increase in income does not shift the consumption function upward; instead, it moves along the consumption function. The consumption function itself represents the relationship between consumption and income, so changes in income result in movements along the curve rather than shifts of the curve. Increases in wealth, decreases in the rate of interest, and expectations of better economic conditions are factors that can shift the consumption function upward by changing consumer behavior independently of income.

All of the Following Shift the Consumption Function Upward EXCEPT