An Upward Shift in the Consumption Function

question 45

Multiple Choice

An upward shift in the consumption function

• A) results if people decide they want to save more.
• B) has the same kind of multiplier effect as an increase in investment.
• C) occurs if people's incomes rise.
• D) raises the average propensity to save.
• E) raises the marginal propensity to consume.

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Definitions:

Divergent Thinking

Type of thinking in which a person starts from one point and comes up with many different ideas or possibilities based on that point.

Circular Thinking

A form of reasoning in which the conclusion is also used as one of the premises, often leading to logical fallacies.

Convergent Thinking

Type of thinking in which a problem is seen as having only one answer, and all lines of thinking will eventually lead to that single answer, using previous knowledge and logic.

Morphemes

The smallest grammatical units in a language that carry meaning.