In the consumption function represented by C = a + bY, what does the parameter 'b' signify?

Show Answers

The marginal propensity to consume.The income level at which consumption equals zero.The average amount consumed.The consumption value when income is zero.

Explanation

'b' denotes the marginal propensity to consume, which indicates how much consumption changes with a change in income. The other options describe different concepts: 'a' represents consumption at zero income, not 'b'.