What do you understand by ‘parametric shift of a line’? How does a line shift when its
(i) slope decreases, and (ii) its intercept increases?
Change in consumption curve due to the change in its slope is known as parametric shift in the curve.
Let C = C + by be the consumption function
b – MPC
y – Income
(i) When slope decreases – The consumption curve will swing downwards. This is known as parametric shift in the curve.
(ii) When its intercept increases – Intercept is the autonomous part of consumption function, so when intercept increases there will be a parallel shift in the consumption curve.