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A Reduction in the Marginal Propensity to Save from

Question 33

Multiple Choice

A reduction in the marginal propensity to save from .4 to .3 will cause

A) the ZZ line to become steeper and a given change in autonomous consumption (c₀) to have a smaller effect on output.
B) the ZZ line to become steeper and a given change in autonomous consumption (c₀) to have a larger effect on output.
C) the ZZ line to become flatter and a given change in autonomous consumption (c₀) to have a smaller effect on output.
D) the ZZ line to become flatter and a given change in autonomous consumption (c₀) to have a larger effect on output.

Correct Answer: