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andrew-mc [135]
3 years ago
6

The consumption function shows the relationship between consumption spending and _______. The slope of the consumption function

is the _________. Changes in consumption can be predicted by multiplying the change in _______ by the If the MPC
Business
1 answer:
Stella [2.4K]3 years ago
6 0

Answer:

Consumption Function : Relationship between Consumption Spending & Income

Consumption Function Slope = Marginal Propensity Curve  (MPC)

Change in Consumption = Change in Income X MPC

Explanation:

Consumption Function is the curve representing relationship between Consumption spending and Income.

C = a + bY ; where :- C = Consumption , Y = Income ,  a = Autonomous Consumption i.e consumption at 0 level of income , b = MPC i.e additional consumption consumed from additional income = ΔC / ΔY

b = MPC i.e change in C due to additional change in Y = ΔC / ΔY is the slope of Consumption Function

MPC = ΔC / ΔY .

So, change in consumption i.e ΔC = MPC X ΔY  

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