What does it mean that slope of consumption function is less than 1 or 45 degree line.?
Answer:
It means that for every extra dollar you get in income, you spend less than one dollar. This relationship is also called the marginal propensity to consume, which is less than 1 and greater than zero.
is this from Macro?
Then it means that people save & invest some of their income.
The slope of the consumption function is called the "Marginal Propensity to Consume". It is assumed to be between zero and one, which means that each one more dollar of disposable income will increase one's consumption by less than one dollar.
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