The consumption function becomes flatter if:
A)the average propensity to spend increases.
B)the marginal propensity to spend increases.
C)the marginal propensity to save increases.
D)the autonomous consumption increases.
E)the autonomous consumption decreases.

Question

Quizplus · Accepted Answer

The marginal propensity to spend is the change in consumption resulting from a change in income. When the marginal propensity to save increases, there is a decrease in the marginal propensity to spend. This leads to a flatter consumption function as the change in consumption resulting from a change in income is smaller.

The Consumption Function Becomes Flatter If