The slope of the consumption function equals the marginal propensity to consume.

Question

Quizplus · Accepted Answer

The consumption function represents the relationship between disposable income and consumption. The slope of this function represents the change in consumption for every one-unit change in disposable income. This slope is equal to the marginal propensity to consume, which is the fraction of an additional unit of income that is spent on consumption. Therefore, the statement is true.

The Slope of the Consumption Function Equals the Marginal Propensity