Which of the following concerning the marginal propensity to consume and the consumption functi true?
I. The larger the marginal propensity to consume, the greater the amount of autonomous consum
II. The larger the marginal propensity to consume, the steeper the consumption function.
A) I is true.
B) II is true.
C) Both I and II are true.
D) Neither I nor II is true.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) affects the slope of the consumption function, not the level of autonomous consumption. A larger MPC results in a steeper consumption function.

Which of the Following Concerning the Marginal Propensity to Consume