Other things constant, how would a smaller marginal propensity to save affect the consumption function?
A) The smaller the marginal propensity to save, the longer the consumption function.
B) The smaller the marginal propensity to save, the shorter the consumption function.
C) The smaller the marginal propensity to save, the flatter the consumption function.
D) The smaller the marginal propensity to save, the steeper the consumption function.

Question

Other things constant, how would a smaller marginal propensity to save affect the consumption function?  
A) The smaller the marginal propensity to save, the longer the consumption function. 
B) The smaller the marginal propensity to save, the shorter the consumption function. 
C) The smaller the marginal propensity to save, the flatter the consumption function. 
D) The smaller the marginal propensity to save, the steeper the consumption function.

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is inversely related to the marginal propensity to consume (MPC). A smaller MPS means a larger MPC, which implies that consumers are likely to spend a larger portion of any additional income, making the consumption function steeper.

Other Things Constant, How Would a Smaller Marginal Propensity to Save