FIGURE 22-4 Refer to Figure 22-4.The rotation from AE₁ to AE₀could be caused by A)an increase in the marginal propensity to consume out of disposable income. B)a decrease in the marginal propensity to import. C)an increase in the marginal propensity to import. D)a decrease in the net tax rate. E)a decrease in government purchases.

Question

Quizplus · Accepted Answer

The rotation from AE₁ to AE₀ indicates an increase in imports, which is caused by an increase in the marginal propensity to import.