The figure given below shows the consumption function of a household.?Figure 9.2

-In Figure 9.2, an increase in autonomous consumption would be illustrated by:
A) a movement from point A to point D.
B) a movement from point A to point B.
C) an upward shift of the consumption function.
D) a downward shift of the consumption function.
E) a movement from point C to point B.

Question

The figure given below shows the consumption function of a household.?Figure 9.2
 
-In Figure 9.2, an increase in autonomous consumption would be illustrated by:
A) a movement from point A to point D. 
B) a movement from point A to point B. 
C) an upward shift of the consumption function. 
D) a downward shift of the consumption function. 
E) a movement from point C to point B.

Quizplus · Accepted Answer

An increase in autonomous consumption implies that at any given level of income, households will consume more than previously assumed. This means that the consumption function shifts upward. Therefore, the correct choice is C, an upward shift of the consumption function.

The Figure Given Below Shows the Consumption Function of a Household.?Figure