An increase in the marginal propensity to import will cause

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to import means that a larger portion of any increase in income will be spent on imports, rather than on domestically produced goods and services. This will cause the ZZ line to become flatter, as a given increase in government spending will have a smaller effect on domestic output due to a larger portion of that spending leaking out through imports. Therefore, choice B is the best answer.

An Increase in the Marginal Propensity to Import Will Cause