Is consumption curve always a straight line? Why or why not? Explain.

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Solution

Whether the consumption curve is a straight line or a curve depends on its slope. The slope of consumption curve is MPC i.e. , $\frac{△ C}{△ Y}$ .
If MPC in an economy is constant, it means that the rate of change in consumption due to change in income is constant.

But, if MPC is not constant, then the consumption curve will not be a straight line.

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