FIGURE 21-2
-Refer to Figure 21-2.The slope of the consumption function in the figure is equal to
A)1.0.
B)0.67.
C)0.5.
D)-0.5.
E)-1.0.

Question

FIGURE 21-2
-Refer to Figure 21-2.The slope of the consumption function in the figure is equal to
A)1.0. 
B)0.67. 
C)0.5. 
D)-0.5. 
E)-1.0.

Quizplus · Accepted Answer

The slope of the consumption function represents the marginal propensity to consume (MPC), which is typically between 0 and 1. A slope of 0.5 indicates that for every additional unit of income, consumption increases by 0.5 units.

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