AP Macroeconomics Question 289: Answer and Explanation

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Question: 289

2. Which of the following is true about the consumption function?

  • A. The slope is equal to the MPC.
  • B. The slope is equal to the MPS.
  • C. The slope is equal to MPC + MPS.
  • D. It shifts upward when consumers are more pessimistic about the future.
  • E. It shifts downward when consumer wealth increases in value.

Correct Answer: A


A —The slope of the consumption function is the MPC. The slope of the saving function is the MPS.