The figure above shows two aggregate expenditure lines.
-In the figure above, if the marginal propensity to import increased, the aggregate expenditure lines would ________ and the multiplier would ________ in value.
A) become steeper; rise
B) become less steep; fall
C) become less steep; rise
D) not change; rise
E) not change; fall

Question

The figure above shows two aggregate expenditure lines.
-In the figure above, if the marginal propensity to import increased, the aggregate expenditure lines would ________ and the multiplier would ________ in value.
A) become steeper; rise 
B) become less steep; fall 
C) become less steep; rise 
D) not change; rise 
E) not change; fall

Quizplus · Accepted Answer

An increase in the marginal propensity to import means that more of any additional income is spent on imports rather than domestic goods, reducing the slope of the aggregate expenditure line and decreasing the multiplier effect.

The Figure Above Shows Two Aggregate Expenditure Lines