FIGURE 21-2
-Refer to Figure 21-2.The slope of the consumption function in the figure is equal to
A)the marginal propensity to consume.
B)the average propensity to consume.
C)the marginal propensity to save.
D)the average propensity to save.
E)the slope of the 45-degree line.

Question

FIGURE 21-2
-Refer to Figure 21-2.The slope of the consumption function in the figure is equal to
A)the marginal propensity to consume. 
B)the average propensity to consume. 
C)the marginal propensity to save. 
D)the average propensity to save. 
E)the slope of the 45-degree line.

Quizplus · Accepted Answer

The slope of the consumption function represents the change in consumption for a given change in income. This is also known as the MPC (marginal propensity to consume), which is the fraction of additional income that is spent on consumption. Therefore, the slope of the consumption function in Figure 21-2 is equal to the MPC.

FIGURE 21-2 -Refer to Figure 21-2.The Slope of the Consumption Function in Function