Which of the following shifts the entire consumption function upwards?
A) an increase in income
B) a decrease in the value of consumer durables
C) a decrease in consumer confidence
D) an increase in consumer wealth

Question

Quizplus · Accepted Answer

An increase in consumer wealth will increase consumption at all levels of income, shifting the consumption function upwards. Option A is incorrect because an increase in income leads to a parallel upward shift in the consumption function. Option B is incorrect because a decrease in the value of consumer durables will lead to a downward shift in the consumption function at all levels of income. Option C is incorrect because a decrease in consumer confidence will lead to a decrease in consumption at all levels of income, shifting the consumption function downwards.

Which of the Following Shifts the Entire Consumption Function Upwards