Which of the following is true of long-run consumption functions?
A)Autonomous consumption is equal to zero in the long-run.
B)The long run consumption functions are steeper than short run consumption functions.
C)The marginal propensity to consume for the long run consumption function is almost equal to zero.
D)The autonomous consumption is negative in long run consumption functions.
E)The long run consumption function is represented by a straight line parallel to the horizontal axis.

Question

Quizplus · Accepted Answer

In the long run, consumption functions tend to be steeper because consumers adjust their consumption based on permanent income rather than temporary changes, reflecting a higher marginal propensity to consume out of permanent income.

Which of the Following Is True of Long-Run Consumption Functions