5. An increase in the marginal propensity to consume from 0.6 to 0.8 will cause (a)...
5. An increase in the marginal propensity to consume from 0.6 to 0.8 will cause
(a) the ZZ line to become steeper and a given change in autonomous consumption to have a smaller effect on output
(b) the ZZ line to become flatter and a given change in autonomous consumption to have a smaller effect on output
(c) the ZZ line to become steeper and a given change in autonomous consumption to have a larger effect on output
(d) the ZZ line to become flatter and a given change in autonomous consumption to have a larger effect on output
Homework Answers
"C"
An increase in the MPC will make the ZZ line or the aggregate expenditure line more flatter and an change in the autonomous consumption will have a larger effect on the output as more percentage of the income is spend by the household.
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5. An increase in the marginal propensity to consume from 0.6 to
0.8 will cause
(a)...
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