A decrease in autonomous consumption will
A) shift the aggregate expenditure function downward.
B) increase the marginal propensity to save.
C) change the slope of the consumption function.
D) shift the consumption function upward.

Question

Quizplus · Accepted Answer

Autonomous consumption refers to the amount of consumption that is not affected by changes in income, such as basic necessities like food and shelter. A decrease in autonomous consumption would mean that households are spending less on these basic necessities, which would shift the aggregate expenditure function downward as total consumption expenditure has decreased. None of the other choices accurately describe the effect of a decrease in autonomous consumption.

A Decrease in Autonomous Consumption Will