-Refer to Figure 11.4. Which diagram illustrates the effect of an increase in the marginal propensity to consume?

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Diagram A illustrates the effect of an increase in the marginal propensity to consume. The MPC is the slope of the consumption function, which shows the relationship between disposable income and consumption spending. An increase in the MPC means that consumers will spend a larger proportion of their disposable income on consumption goods and services, and a smaller proportion on saving. This will lead to an increase in aggregate demand, which is the total demand for goods and services in an economy.