The slope of the consumption function can be determined by dividing the change in
A) real consumption spending by the change in real disposable income
B) nominal spending by the change in nominal disposable income
C) real disposable income by the change in real consumption spending
D) nominal disposable income by the change in nominal consumption spending
E) total consumption spending by the change in autonomous consumption spending

Question

Quizplus · Accepted Answer

The slope of the consumption function represents the marginal propensity to consume (MPC), which is defined as the change in consumption spending resulting from a change in disposable income. Therefore, the slope can be determined by dividing the change in real consumption spending by the change in real disposable income.

The Slope of the Consumption Function Can Be Determined by Dividing