In the Keynesian consumption function
A)consumption is a constant fraction of income.
B)the marginal propensity to consume is constant.
C)disposable income determines consumption.
D)All of the above
E)None of the above

Question

Quizplus · Accepted Answer

The Keynesian consumption function states that consumption is a function of disposable income, and that the marginal propensity to consume (MPC) is constant. Specifically, the function is C = a + MPC(Yd), where C is consumption, a is autonomous consumption (consumption that occurs even when income is zero), MPC is the marginal propensity to consume, and Yd is disposable income. Therefore, all three options (A, B, and C) are true for the Keynesian consumption function, making D the best choice.

In the Keynesian Consumption Function