AP Macroeconomics Question 379: Answer and Explanation

Test Information

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Question: 379

2. If households are more optimistic about the future, how would the consumption function be affected?

  • A. The marginal propensity to consume would increase, increasing the slope of the consumption function.
  • B. The entire consumption function would shift downward.
  • C. The entire consumption function would shift upward.
  • D. The marginal propensity to consume would decrease, increasing the slope of the consumption function.
  • E. The marginal propensity to consume would increase, decreasing the slope of the consumption function.

Correct Answer: C

Explanation:

C-Greater optimism shifts the consumption function upward. The MPC is unchanged.