The slope of the consumption function is
A) negative.
B) greater than 1.
C) less than 1.
D) 1.

Question

Quizplus · Accepted Answer

The slope of the consumption function is the marginal propensity to consume (MPC), which represents the change in consumption for a given change in income. The MPC is always between 0 and 1, meaning that consumption increases but at a decreasing rate as income increases. Therefore, the slope of the consumption function is always less than 1. Option A is incorrect because the consumption function can have a positive slope in some cases, such as when income is very low. Option B is incorrect because the slope cannot be greater than 1. Option D is incorrect because the MPC is typically less than 1.

The Slope of the Consumption Function Is