An Increase in the Propensity to Consume from 0

question 47

Multiple Choice

An increase in the propensity to consume from 0.42 to 0.78 will cause:

• A) the ZZ line to become flatter and a given change in autonomous consumption (c0) to have a smaller effect on output.
• B) the ZZ line to become steeper and a given change in autonomous consumption (c0) to have no effect on output.
• C) the ZZ line to become steeper and a given change in autonomous consumption (c0) to have a larger effect on output.
• D) the ZZ line to become steeper and a given change in autonomous consumption (c0) to have a smaller effect on output.
• E) the ZZ line to become flatter and a given change in autonomous consumption (c0) to have a larger effect on output.

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Definitions:

Deposits

The act of placing money into a financial account, or the money that is placed into such an account.

Checks

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or a designated recipient.

Boswell Co.

A fictitious or specific company name; without context, it's unspecified what industry or sector it belongs to.

Check Register

A record book or electronic log used to track checks written, deposits made, and current balance of a checking account.