An increase in the marginal propensity to spend out of national income will cause
A)a decrease in the slope of the AE curve.
B)a movement to the left along the AE curve.
C)a parallel upward shift in the AE curve.
D)a movement to the right along the AE curve.
E)an increase in the slope of the AE curve.

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to spend out of national income increases the slope of the Aggregate Expenditure (AE) curve, as it indicates a higher change in spending for each additional unit of income.

An Increase in the Marginal Propensity to Spend Out of National