When disposable income increases,
A) the consumption function shifts upward.
B) there is a movement upward along the consumption function but the consumption function does not shift.
C) there is no movement along the consumption function and the consumption function does not shift.
D) the consumption function shifts downward.
E) there is a movement downward along the consumption function but the consumption function does not shift.

Question

Quizplus · Accepted Answer

When disposable income increases, consumers tend to spend more, leading to a movement upward along the consumption function, but the function itself does not shift.

When Disposable Income Increases