In the consumption equation, the slope of the consumption function is represented as:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → $c$
In the consumption function, typically written as:
C = $\bar C + cY$
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$\bar C$ is autonomous consumption (consumption when income is zero)
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c is the marginal propensity to consume (MPC) — the slope of the consumption function
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Y is the income
The slope of the consumption function represents how much consumption changes with a change in income, and this is given by c.