A downward shift of the consumption function can be caused by:
A)expectations of higher incomes
B)expectations of higher incomes.
C)an increase in the marginal propensity to consume
D)an increase in the marginal propensity to consume.
E)a decline in consumer wealth
F)a decline in consumer wealth.
G)an increase in the wealth of households
H)an increase in the wealth of households.

Question

Quizplus · Accepted Answer

A decline in consumer wealth would lead to a decrease in consumption, causing a downward shift of the consumption function. Choices A, C, and G would lead to an upward shift of the consumption function, while choice H may or may not have an effect on the consumption function, depending on the specific circumstances. The answer choices are repeated, so one of each pair is redundant.

A Downward Shift of the Consumption Function Can Be Caused