Which one of the following changes is consistent with a change in an economy's consumption function from C = $500 billion + 0.80Y to C = $700 billion + 0.80Y?
A)An increase in disposable income taxes.
B)An increase in interest rates
C)A decrease in permanent disposable income.
D)An increase in wealth.
E)An increase in savings.

Question

Quizplus · Accepted Answer

An increase in wealth would lead to an increase in autonomous consumption, which is reflected in the increase from $500 billion to $700 billion in the consumption function.

Which One of the Following Changes Is Consistent with a Change