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If Liquidity Constraints - the Inability to Borrow - Begins

Question 16

Multiple Choice

If liquidity constraints - the inability to borrow - begins to increase for households,


A) the marginal propensity to consume is likely to decrease.
B) the marginal propensity to consume is likely to increase.
C) the interest sensitivity of investment is likely to increase.
D) the marginal propensity to consume will not be affected.

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