If the marginal propensity to consume were to increase with no change in the tax rate, then the consumption function drawn on a graph with disposable income on the horizontal axis would
A) rotate to a steeper line around the same intercept.
B) rotate to a steeper line and start at a higher intercept.
C) rotate to a steeper line but start from a lower intercept.
D) rotate to a flatter line around the same intercept.
E) shift to a parallel line starting from a higher intercept.

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to consume (MPC) means that for any given increase in disposable income, consumption will increase by a larger amount than before. This results in a steeper slope for the consumption function, as the change in consumption per unit change in disposable income is greater. The intercept, which represents autonomous consumption (consumption when income is zero), does not change because the increase in MPC does not affect the level of consumption when income is zero.

If the Marginal Propensity to Consume Were to Increase with No