Refer to the information provided in Figure 8.4 below to answer the questions that follow. Figure 8.4
-Refer to Figure 8.4.Suppose the consumption function for C1 = 10 + 0.8Y,the consumption function that best fits C2 is
A)C2 = 20 + 0.8Y.
B)C2 = 10 + 0.4Y.
C)C2 = 40 + 0.5Y.
D)C2 = 20 + 0.1Y.

Question

Refer to the information provided in Figure 8.4 below to answer the questions that follow.  Figure 8.4
-Refer to Figure 8.4.Suppose the consumption function for C1 = 10 + 0.8Y,the consumption function that best fits C2 is
A)C2 = 20 + 0.8Y. 
B)C2 = 10 + 0.4Y. 
C)C2 = 40 + 0.5Y. 
D)C2 = 20 + 0.1Y.

Quizplus · Accepted Answer

The consumption function C2 = 20 + 0.8Y has the same marginal propensity to consume (0.8) as C1, but with a higher autonomous consumption (20 instead of 10).

Refer to the Information Provided in Figure 8