Refer to Figure a. Assuming the solid line in the graph is a constant expected consumption line where ? (the probability of state S) = 0.50, which constant expected consumption line reflects an increase in ??





A. The dotted line



B. The dashed line



C. An increase in ? does not result in a change in the expected consumption line.



D. A change in ? results in a parallel shift in the expected consumption line, so neither the dotted nor the dashed line reflects this change.


A. The dotted line

Economics

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