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

Question

Quizplus · Accepted Answer

This statement is true. The consumption function is typically represented by a linear equation, where the slope (or gradient) of the line represents the marginal propensity to consume (MPC). The MPC is the fraction of each additional dollar of income that is spent on consumption, which is reflected in the slope of the graph. Therefore, the slope of the consumption function does equal the MPC.

The Slope of a Graph of the Consumption Function Equals