The slope of the consumption function shows how:
A)consumption changes over time.
B)consumption changes as household size changes.
C)consumption changes as the price level changes.
D)income changes as the level of consumption changes.
E)consumption changes as the level of income changes.

Question

Quizplus · Accepted Answer

The slope of the consumption function measures the change in consumption that results from a change in income. As income increases, consumption will typically increase, but the slope will determine the degree to which consumption increases. This is why E is the correct answer, as it best captures the relationship between income and consumption.

The Slope of the Consumption Function Shows How