The consumption function. C = a + bYD

Fill in each blank with increases or decreases to answer each question correctly.

Identify which direction the consumption function (C(Y)) and aggregate demand (AD) curves will shift when

a. consumer confidence increases.

consumption function [ Select ] ["increases", "decreases"]

aggregate demand [ Select ] ["increases", "decreases"]

b. income taxes go up.

Consumption function [ Select ] ["increases", "decreases"]

Aggregate demand [ Select ] ["increases", "decreases"]

c. interest rates decline.

Consumption function [ Select ] ["increases", "decreases"]

Aggregate demand [ Select ] ["increases", "decreases"]

d. the stock market rises.

Consumption function [ Select ] ["increases", "decreases"]

Aggregate demand [ Select ] ["increases", "decreases"]

e. home prices decline.

Consumption function [ Select ] ["increases", "decreases"]

Aggregate demand