In the consumption function C = Ca + bY, the term b represents:
A) the marginal propensity to consume.
B) the multiplier effect.
C) the autonomous consumption spending.
D) the marginal propensity to save.

Question

Quizplus · Accepted Answer

The term "b" in the consumption function represents the slope of the consumption function, which is the marginal propensity to consume (MPC). It indicates how much of an increase in disposable income will be spent on consumption.

In the Consumption Function C = Ca + BY, the Term