Question:medium

The consumption function curve is

Show Hint

C = a + bY with MPC (b) between 0 and 1 gives a positively sloped line.
Updated On: Sep 23, 2026
  • Upward sloping
  • Downward sloping
  • Parallel to the x-axis
  • Parallel to the y-axis
Show Solution

The Correct Option is A

Solution and Explanation

Step 1: Write the equation:
$C = a + bY$, where $a > 0$ is autonomous consumption (consumption even at zero income) and $0 < b < 1$ is the MPC.

Step 2: Read the slope directly:
In any linear equation $y = mx + c$, the coefficient of $x$ is the slope. Here $b$ is that coefficient, and since $b > 0$, the line must rise from left to right.

Step 3: Confirm with two points:
At $Y=0$, $C=a$. At $Y=100$, $C=a+100b > a$. Consumption strictly increases as income increases, confirming an upward slope.

Final Answer:
Option A, upward sloping.
Was this answer helpful?
0