If autonomous consumption (Ca) increases, the slope of the consumption function becomes steeper. True False

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If autonomous consumption (Ca) increases, the slope of the consumption function becomes steeper. True False

If autonomous consumption (C_a) increases, the slope of the consumption function becomes steeper.

True

False

business economics

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Answer 1

Answer #1

Answer

False

The consumption function is the form of

C=autonomus consumption +MPC*Y

MPC is the slope of the function and there is no relationship between slope and autonomous consumption so the change in autonomous consumption will not change slope.

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Answer 2

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If autonomous consumption (Ca) increases, the slope of the consumption function becomes steeper. True False

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