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Question : In which of the following ways is the aggregate demand function related to the consumption function?
I. They have the same slope C.
II. The aggregate demand function is parallel to the consumption function.

Option 1: Neither I nor II

Option 2: Only II

Option 3: Only I

Option 4: Both I and II


Team Careers360 14th Jan, 2024
Answer (1)
Team Careers360 17th Jan, 2024

Correct Answer: Both I and II


Solution : The correct option is Both I and II.

I. The aggregate demand function and the consumption function may have the same slope (C) as both involve the relationship between income and spending.

II. The aggregate demand function is parallel to the consumption function when other components like investment and government spending remain constant, reflecting their interdependence in determining overall economic demand.

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