The slope of the aggregate expenditure curve increases when the marginal propensity to consume___________ or the marginal propensity to import ___________ .
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases

Question

Quizplus · Accepted Answer

The slope of the aggregate expenditure curve is determined by the marginal propensity to consume (MPC) and the marginal propensity to import (MPM). An increase in MPC increases the slope, while a decrease in MPM also increases the slope, as less is spent on imports.

The Slope of the Aggregate Expenditure Curve Increases When the Marginal