Suppose an economy’s consumption schedule shifts from C1 to C2 as shown in the above diagram. We can say that its:
A)MPC has increased but its APC at each income level is unchanged.
B)APC at each income level is increased but its MPC is unchanged.
C)MPC and APC at each income level have both increased.
D)MPC and APC at each income level have both decreased.
Answer:C
Suppose an economy’s consumption schedule shifts from C1 to C2 as shown in the above diagram. We can say that its:
A)MPC has increased but its APC at each income level is unchanged. B)APC at each income level is increased but its MPC is unchanged. C)MPC and APC at each income level have both increased. D)MPC and APC at each income level have both decreased.