Consumers in a booming economy become so optimistic that they decide to save less at every possible level of income. Which of the following statements is true?

1. This is represented by a downward move along the consumption function
2. This is represented by an upward move along the consumption function
3. This is represented by a downward shift of the consumption function
4. This is represented by an upward shift of the consumption function

Consumers in a booming economy become so optimistic that they decide to save less at every possible level of income. The reduction in autonomous saving is 100. The marginal rate of consumption is 0.8. Income increases by...

1. 80
2. 100
3. 125
4. 500