The graph of the consumption function has consumption expenditure on the vertical axis and
A) the Consumer Price Index on the horizontal axis.
B) the interest rate on the horizontal axis.
C) time on the horizontal axis.
D) disposable income on the horizontal axis.

Question

Quizplus · Accepted Answer

The consumption function shows the relationship between consumption expenditure and disposable income, so the horizontal axis should be labeled with disposable income. The other choices do not accurately reflect the relationship between consumption expenditure and the variable on the horizontal axis.

The Graph of the Consumption Function Has Consumption Expenditure on the Vertical