AP Macroeconomics Question 289: Answer and Explanation
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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.