Positive Slope

Between point b and point c in Figure Al-1 the rise or vertical change (the change in consumption) is +$50 and the run or horizontal change (the change in income) is +$100. Therefore:


_ verticalchange _ +50 _ 1 horizontal change +100 2

Note that our slope of V2 or .5 is positive because consumption and income change in the same direction; that is, consumption and income are directly or positively related.

The slope of .5 tells us there will be a $1 increase in consumption for every $2 increase in income. Similarly, it indicates that for every $2 decrease in income there will be a $1 decrease in consumption.

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