Asked by
Kendyl Tillie
on Nov 11, 2024Verified
The smaller the marginal propensity to save,other things constant,_____.
A) the smaller the marginal propensity to consume
B) the larger the multiplier
C) the smaller the multiplier
D) the flatter the consumption function
E) the steeper the saving function
Marginal Propensity
The proportion of an additional increment of income that is spent on consumption. It reflects the change in consumption resulting from a change in income.
Multiplier
A factor by which an initial change in spending will alter total economic output by more than the initial monetary amount.
- Determine and appreciate the significance of the elementary spending multiplier in the context of marginal propensity to consume and save.
- Understand the impact of alterations in the marginal propensities to save and consume on both the consumption function and the multiplier effect.
Verified Answer
AM
Learning Objectives
- Determine and appreciate the significance of the elementary spending multiplier in the context of marginal propensity to consume and save.
- Understand the impact of alterations in the marginal propensities to save and consume on both the consumption function and the multiplier effect.
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