Because the marginal propensity to consume is positive, the consumption function is:

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) measures the change in consumption for every change in income. Since it is positive, it means that as income increases, consumption also increases. This relationship is reflected in an upward-sloping consumption function, where higher levels of income are associated with higher levels of consumption.

Because the Marginal Propensity to Consume Is Positive, the Consumption