According to the consumption function, as income increases, consumption

Question

Quizplus · Accepted Answer

According to the consumption function, as income increases, consumption increases by a smaller amount. This is because people tend to save a portion of their additional income rather than spend it all on consumption goods. This is reflected in the marginal propensity to consume (MPC), which measures the change in consumption due to a change in income. The MPC is always less than one, indicating that consumption increases by a smaller amount than the increase in income.

According to the Consumption Function, as Income Increases, Consumption