Other things constant, how would a larger marginal propensity to save affect the consumption function?
A) The consumption function would stay the same.
B) The consumption function would be negative
C) The consumption function would become steeper.
D) The consumption function would become flatter.

Question

Other things constant, how would a larger marginal propensity to save affect the consumption function?  
A) The consumption function would stay the same. 
B) The consumption function would be negative 
C) The consumption function would become steeper. 
D) The consumption function would become flatter.

Quizplus · Accepted Answer

A larger marginal propensity to save means that a higher fraction of additional income is saved rather than spent, leading to a flatter consumption function because each additional unit of income leads to less additional consumption.

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