Which of the following would cause an upward shift in the consumption function?
A)a stock market crash
B)an increase in the price level
C)a decrease in disposable income
D)a decrease in the price level

Question

Which of the following would cause an upward shift in the consumption function?
A)a stock market crash 
B)an increase in the price level 
C)a decrease in disposable income 
D)a decrease in the price level

Quizplus · Accepted Answer

A decrease in the price level would cause an upward shift in the consumption function. This is because when the price level decreases, the purchasing power of consumers increases, leading to an increase in their disposable income. As a result, consumers are likely to spend more on consumption goods and services, leading to an upward shift in the consumption function.

Which of the Following Would Cause an Upward Shift in the Consumption