Suppose aggregate output is demand-determined.The simple multiplier will increase as a result of
A)an increase in the marginal propensity to consume.
B)a decrease in the marginal propensity to consume.
C)a decrease in autonomous consumption.
D)an increase in autonomous consumption.
E)an increase in investment.

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to consume will lead to a higher consumption spending in response to an increase in income, resulting in a larger increase in aggregate demand and output, thus increasing the simple multiplier.

Suppose Aggregate Output Is Demand-Determined