Which of the following is not reflected in the constant term associated with the marginal propensity to consume?
A) The level of C if Y were zero
B) People's consumption with zero income
C) All other influences on consumption besides income
D) All of the above are reflected in the constant term.

Question

Quizplus · Accepted Answer

The constant term in the consumption function, often represented as "a" in the equation C = a + bY (where C is consumption, Y is income, and b is the marginal propensity to consume), reflects the level of consumption when income is zero, capturing all other influences on consumption besides income. Thus, all the options listed are aspects that the constant term accounts for.

Which of the Following Is Not Reflected in the Constant