Answer to Question #135042 in Macroeconomics for cameron

Question

If the marginal propensity to consume increases: (2)
(1) The slope of the consumption function will be steeper.
(2) There will be a movement from left to right along the consumption function.
(3) The consumption function will shift parallel upwards.
(4) The consumption function will shift parallel downwards.

Answer 1

(1)The slope of the consumption function will be steeper.

If the marginal propensity to consume increases, the consumption function becomes steeper. This means people are spending a higher % of their additional income which could be due to rising confidence, lower saving, and easier availability of credit.