When the real interest rate falls, the consumption function
A)shifts upward.
B)does not shift and there is a movement downward along the consumption function.
C)does not shift and there is no movement along the consumption function.
D)does not shift and there is a movement upward along the consumption function.
E)shifts downward.

Question

Quizplus · Accepted Answer

When the real interest rate falls, the consumption function shifts upward because consumers are encouraged to borrow more and spend more.

When the Real Interest Rate Falls, the Consumption Function