An increase in the marginal propensity to consume will tend to cause:

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to consume means that a larger portion of any increase in income will be spent, rather than saved. This results in a steeper demand line, as a given change in investment will have a greater effect on output. Therefore, choice (B) is correct. Choice (A) is incorrect because a flatter demand line would result from a decrease in the marginal propensity to consume. Choice (C) is incorrect because it contradicts the explanation above. Choice (D) is incorrect because there is a clear impact on the demand line and output.

An Increase in the Marginal Propensity to Consume Will Tend