Because a change in consumer spending is positively related to a change in income, the slope of the aggregate demand function is:
A)0.
B)1.
C)equal to the MPC.
D)equal to the marginal propensity to save.

Question

Quizplus · Accepted Answer

The slope of the aggregate demand function measures the responsiveness of aggregate demand to changes in income. Since consumer spending is positively related to a change in income and the MPC measures the change in consumer spending for a given change in income, the slope of the aggregate demand function is equal to the MPC. Therefore, choice C is the correct answer.

Because a Change in Consumer Spending Is Positively Related to a Change