The consumption function shifts upward when
A) real income increases.
B) saving increases.
C) households' real wealth increases.
D) households buy more imports.

Question

Quizplus · Accepted Answer

The consumption function shifts upward when households' real wealth increases because they feel richer and are likely to spend more, not necessarily due to an increase in current income but due to an increase in their wealth.

The Consumption Function Shifts Upward When