Figure 13-3 -Refer to Figure 13-3. Upward shifts of the consumption function, for example from C₀ to C₁ to C₂demonstrate A) an increase in the marginal propensity to save. B) increases in the amount of consumption for a given level of disposable income. C) increases in the amount of disposable income available for consumption. D) an increase in the marginal propensity to save

Question

Quizplus · Accepted Answer

Upward shifts of the consumption function indicate an increase in the amount of consumption for a given level of disposable income. This means that as disposable income increases, consumers are spending more. There is no indication of changes in the marginal propensity to save in this scenario.

Figure 13-3 -Refer to Figure 13-3. Upward Shifts of the Consumption Function