In the sticky-price model, the consequences of a decrease in the marginal propensity to consume include each of the following except
A) a decrease in consumption spending.
B) an increase in exports.
C) a decrease in the employment level.
D) a decrease in real GDP.

Question

Quizplus · Accepted Answer

In the sticky-price model, a decrease in the marginal propensity to consume would lead to a decrease in consumption spending, which could cause a decrease in the employment level and a decrease in real GDP. However, it does not directly lead to an increase in exports; exports are more directly influenced by factors such as exchange rates and foreign demand.

In the Sticky-Price Model, the Consequences of a Decrease in the Marginal