The slope of the consumption function:
A) is vertical.
B) is horizontal.
C) equals 1.
D) equals the mpc.

Question

Quizplus · Accepted Answer

The slope of the consumption function represents the marginal propensity to consume (MPC). Therefore, option D, which states that the slope of the consumption function equals the MPC, is the correct choice. Option A is incorrect because a vertical slope would indicate that changes in disposable income do not affect consumption, which is not the case. Option B is incorrect because a horizontal slope would indicate that consumption does not change with changes in disposable income, which is also not accurate. Option C is incorrect because a slope of 1 would indicate that consumption always equals disposable income, which is not generally true.

The Slope of the Consumption Function