Answer to Question #211703 in Economics for Paballo

Question

The consumption function is based on the premise that as income increases, consumption

expenditure …

[1] increases by a larger amount.

[2] increases by the same amount.

[3] remains constant unless saving also changes.

[4] increases by a smaller amount.

Answer 1

The consumption function is based on the premise that as income increases, consumption expenditure increases by a smaller amount.

So, the correct answer is [4].