In the consumption function: C = a + b(Y - NT), the term b represents the
A)intercept of the consumption function
B)level of taxation
C)level of net taxation
D)level of income
E)marginal propensity to consume

Question

Quizplus · Accepted Answer

The term b in the consumption function represents the marginal propensity to consume, which is the slope of the consumption function and measures the change in consumption resulting from a change in income. It reflects the proportion of any change in income that is consumed rather than saved.

In the Consumption Function: C = a + B(Y -