When investment remains the same at each level of GDP in a private closed economy, the slope of the aggregate expenditures schedule
A) exceeds the MPC.
B) is less than the MPC.
C) equals the MPS.
D) equals the MPC.

Question

Quizplus · Accepted Answer

If investment remains constant, the slope of the aggregate expenditures schedule will be equal to the marginal propensity to consume (MPC) because any change in income will be reflected in a change in consumption. Thus, the correct answer is D, which states that the slope equals the MPC.

When Investment Remains the Same at Each Level of GDP