If income increases by $100 and consumption increases by $75,the slope of the consumption function equals
A)1/4
B)1/5
C)1/2
D)3/4
E)3/5

Question

Quizplus · Accepted Answer

The slope of the consumption function is given by the change in consumption over the change in income.

slope = ΔC / ΔY

Given that when income increases by $100, consumption increases by $75, we have:

slope = ΔC / ΔY = 75/100 = 3/4

Therefore, the slope of the consumption function is 3/4.

The correct answer is D.

If Income Increases by $100 and Consumption Increases by $75,the