-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would
A) increase.
B) decrease.
C) stay the same but the AE curve would shift upwards.
D) stay the same but the AE curve would shift downwards.

Question

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would
A) increase. 
B) decrease. 
C) stay the same but the AE curve would shift upwards. 
D) stay the same but the AE curve would shift downwards.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) represents the change in consumption resulting from a change in income. If the MPC increases, it means that consumers are likely to spend a larger portion of any additional income they receive. This behavior makes the AE (Aggregate Expenditure) curve steeper because for any given increase in income, consumption (and thus aggregate expenditure) increases by more.

-In the Above Figure, If the Marginal Propensity to Consume