decreases saving and decreases consumption. 

increases saving and decreases consumption.

increases saving and increases consumption.

decreases saving and increases consumption.

This is shown as a movement along the consumption function. 

so the marginal propensity to consume is negative. 

The consumption function is downward sloping. 

and saving decrease as income increases. 

precautionary savings will decrease and consumption will go up. 

precautionary savings will decrease and consumption will go down. 

precautionary savings will increase  and consumption will go down. 

precautionary savings will increase and consumption will go up. 

Figure C

Figure B

Figure D

Figure A

The consumer is completely aware of anticipated changes in future income. 

There are high tax rates on anticipated changes in future income.

The consumer is not aware of anticipated changes in future income.

The consumer cannot change the consumption. 

is between 0 and 1. 

is constant. 

cannot be 1. 

is same for every household. 

a large change in consumption.

no change in MPC

a small change in consumption.

zero change in saving