The consumption function will shift when
A)Autonomous consumption changes.
B)Induced consumption changes.
C)Autonomous or induced consumption changes.
D)Investment changes.

Question

Quizplus · Accepted Answer

The consumption function shifts when there is a change in autonomous consumption, which is the part of consumption that does not depend on current income. Changes in induced consumption, which is dependent on income, do not shift the function but move along it. Changes in investment affect the overall level of economic activity but do not directly shift the consumption function.

The Consumption Function Will Shift When