Suppose There Is an Increase in the Marginal Propensity to Spend

question 18

Multiple Choice

Suppose there is an increase in the marginal propensity to spend out of national income. The result will be

• A)a downward parallel shift in the AE curve.
• B)an increase in the slope of the AE curve.
• C)a movement up the AE curve.
• D)a movement down the AE curve.
• E)an upward parallel shift in the AE curve.

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Definitions:

Second Term

The subsequent period in office for an elected official after successfully being re-elected for the same position.

Military Buildup

The process of expanding and strengthening a country's armed forces through increased spending, recruitment, and development of weapons and technology.

Arms Talks

Negotiations between nations aimed at mutual reduction or control of military weapons and equipment.

Jay Treaty

The Jay Treaty was an agreement made in 1794 between the United States and Great Britain, aimed at settling outstanding issues since the Treaty of Paris in 1783, which had ended the American Revolutionary War, and facilitating ten years of peaceful trade.