Which of the following characterizes the relationship between the marginal propensity to consume and the consumption function?
A) the larger the MPC, the higher the level of autonomous consumption
B) the larger the MPC, the steeper the consumption function
C) the smaller the MPC, the steeper the consumption function
D) the larger the MPC, the larger the level of autonomous consumption

Question

Which of the following characterizes the relationship between the marginal propensity to consume and the consumption function?  
A) the larger the MPC, the higher the level of autonomous consumption 
B) the larger the MPC, the steeper the consumption function 
C) the smaller the MPC, the steeper the consumption function 
D) the larger the MPC, the larger the level of autonomous consumption

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption resulting from a change in income. The consumption function shows the relationship between consumer spending and disposable income. A larger MPC means that consumers are more likely to spend a higher proportion of their income, resulting in a steeper consumption function.

Which of the Following Characterizes the Relationship Between the Marginal