If the slope of a linear consumption schedule increases in a private closed economy, then it can be concluded that the:
A) MPS has increased
B) MPC has increased
C) Income has increased
D) Income has decreased

Question

Quizplus · Accepted Answer

The slope of a consumption schedule represents the marginal propensity to consume (MPC), which is the change in consumption divided by the change in income. If the slope increases, it means that for every increase in income, there is a larger increase in consumption. This can happen only if the MPC has increased. Therefore, the correct answer is B. An increase in MPS (choice A) would mean a decrease in the slope of the consumption schedule. Income changes (choices C and D) do not necessarily affect the MPC or the slope of the consumption schedule.

If the Slope of a Linear Consumption Schedule Increases in a Private