If after adding investment (I) to the consumption (C) function, we find that the C+I line is parallel to the consumption function, then:

Question

Quizplus · Accepted Answer

When the C+I line is parallel to the consumption function, it means that the slope of the consumption function remains the same after adding investment. This implies that the increase in investment does not affect the marginal propensity to consume. This can only happen if investment is a constant, and not a function of income or consumption. Therefore, choice B is the correct answer.

If After Adding Investment (I) to the Consumption (C) Function