Which of the following conjectures that underlie the Keynesian consumption function is not consistent with aggregate Canadian and U.S. data?
A)The marginal propensity to consume is between 0 and 1.
B)The average propensity to consume decreases as income increases.
C)There is a high correlation between income and consumption.
D)Current income is a determinant of consumption.

Question

Quizplus · Accepted Answer

The Keynesian consumption function suggests that the average propensity to consume decreases as income increases, but empirical data from Canada and the U.S. do not consistently support this, as the average propensity to consume does not always decrease with rising income.

Which of the Following Conjectures That Underlie the Keynesian Consumption