If the MPC increases in value, what will happen to the slope of the consumption function?
A)The slope will decrease and the consumption function will become flatter.
B)The slope will decrease and the consumption function will become steeper.
C)The slope will increase and the consumption function will become steeper.
D)The slope will increase and the consumption function will become flatter.

Question

Quizplus · Accepted Answer

The MPC is the change in consumer spending resulting from a change in disposable income. A higher MPC means that individuals will spend a larger fraction of any increase in income, resulting in a steeper slope of the consumption function. Therefore, if the MPC increases, the slope of the consumption function will also increase and become steeper.

If the MPC Increases in Value, What Will Happen to the Slope