The line described by the consumption function C = a + bY_D will change its slope when A)The MPC changes. B)Consumer confidence changes. C)Disposable income changes. D)The APS changes.

Question

Quizplus · Accepted Answer

The slope of the consumption function is determined by the MPC (marginal propensity to consume), which is represented by the variable 'b' in the equation. If the MPC changes, the slope of the consumption function will also change. Therefore, option A is the correct choice. Changes in consumer confidence, disposable income, and APS (average propensity to save) may affect the level of consumption, but they will not cause a change in the slope of the consumption function.

The Line Described by the Consumption Function C = a