An increase in the marginal propensity to save from .1 to .2 will cause
A) an increase in the multiplier and a given change in autonomous consumption (c0) to have a smaller effect on output.
B) an increase in the multiplier and a given change in autonomous consumption (c0) to have a larger effect on output.
C) a reduction in the multiplier and a given change in autonomous consumption (c0) to have a smaller effect on output.
D) a reduction in the multiplier and a given change in autonomous consumption (c0) to have a larger effect on output.
Correct Answer:
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