An increase in the marginal propensity to consume would cause the IS curve to
A)make a parallel shift to the right.
B)make a parallel shift to the left.
C)rotate to become steeper from its vertical intercept.
D)rotate to become flatter from its vertical intercept.
E)rotate to become flatter from its horizontal intercept.

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to consume increases the multiplier effect, leading to a larger change in output for a given change in interest rates, causing the IS curve to rotate and become flatter from its vertical intercept.

An Increase in the Marginal Propensity to Consume Would Cause