The slope of the consumption function is
A) perfectly horizontal at the equilibrium level.
B) equal to the MPC.
C) equal to 1.
D) vertical at the full employment level of income.

Question

Quizplus · Accepted Answer

The slope of the consumption function is equal to the MPC (marginal propensity to consume), which is the change in consumption resulting from a one-unit change in disposable income. This means that for every additional unit of disposable income, consumers will spend a fraction of it, which is equal to the MPC. Therefore, the slope of the consumption function represents how responsive consumption is to changes in income, and is equal to the MPC.

The Slope of the Consumption Function Is