An increase in the wealth of households, all other things unchanged, will
A) not affect the consumption function.
B) shift the consumption function upward.
C) shift the consumption function downward.
D) cause a movement to the right along the consumption function.

Question

Quizplus · Accepted Answer

An increase in the wealth of households would increase their disposable income, which would likely lead to an increase in consumption at all levels of income. This would shift the consumption function upward.

An Increase in the Wealth of Households, All Other Things