The slope of the consumption schedule between two points on the schedule is
A) the ratio of the change in consumption to the change in disposable income between those two points.
B) the ratio of the change in disposable income over the change in consumption between those two points.
C) equivalent to one plus the marginal propensity to save.
D) equivalent to the average propensity to consume.

Question

Quizplus · Accepted Answer

The slope of the consumption schedule (also known as the consumption function) is the change in consumption over the change in disposable income. Therefore, the ratio of the change in consumption to the change in disposable income between two points on the schedule represents the slope. Option A correctly identifies this ratio as the answer. Option B is incorrect as it reverses the changes, leading to an inverse ratio. Option C relates to the marginal propensity to save and is not directly related to the slope of the consumption schedule. Option D refers to the average propensity to consume, which is different from the slope, as it represents the percentage of total income spent on consumption at a particular level of income.

The Slope of the Consumption Schedule Between Two Points on the Schedule