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The slope of the consumption function is equal to the marginal propensity to save. the real...

The slope of the consumption function is equal to

the marginal propensity to save.

the real interest rate.

the marginal propensity to consume.

the nominal interest rate.

the relative price of consumption.

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Answer #1

Correct choice is the marginal propensity to consume.

Marginal propensity to consume addresses a key economic issue: how much does the consumer spends out of her increased income which implies the proportion of additional income spent. It is the slopeof the consumption function.

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