In the Solow growth model,an increase in the marginal propensity to consume shifts the ________,with the implied change in the capital stock resulting in a ________ standard of living in the long run.
A)steady-state investment line upward,higher
B)steady-state investment line downward,higher
C)national saving line upward,lower
D)national saving line upward,higher
E)national saving line downward,lower

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to consume reduces savings, shifting the national saving line downward, leading to a lower capital stock and a lower standard of living in the long run.

In the Solow Growth Model,an Increase in the Marginal Propensity