The increase in equilibrium income that results from an increase in autonomous investment spending would be:
A) smaller the MPS.
B) smaller the APC.
C) larger the MPS.
D) smaller the MPC.

Question

Quizplus · Accepted Answer

The increase in equilibrium income is equal to the change in autonomous investment spending divided by the marginal propensity to save (MPS). Therefore, the smaller the MPS, the larger the increase in equilibrium income.

The Increase in Equilibrium Income That Results from an Increase