In Figure 9.2,if the consumption function shifts from C₁ to C₂,it can be determined that the A)MPC and APC have increased at each income level. B)MPC and APC have decreased at each income level. C)MPC has increased and the APC has stayed the same at each income level. D)APC has increased and the MPC has stayed the same at each income level.

Question

Quizplus · Accepted Answer

When the consumption function shifts from C₁ to C₂, it means that at every level of income, people are spending a higher proportion of their income. This indicates that both the MPC (Marginal Propensity to Consume) and the APC (Average Propensity to Consume) have increased. Therefore, the correct option is A.