Other things being equal,a higher marginal propensity to spend will lead to a ________ AD curve.
A)flatter
B)steeper
C)rightward shift of the
D)leftward shift of the

Question

Quizplus · Accepted Answer

A higher marginal propensity to spend means that a larger portion of each additional dollar of income will be spent, leading to a smaller increase in savings. This in turn leads to a flatter AD curve as there is a stronger response of aggregate demand to changes in income.

Other Things Being Equal,a Higher Marginal Propensity to Spend Will