An Increase in the Propensity to Save from 0

question 4

Multiple Choice

An increase in the propensity to save from 0.36 to 0.56 will cause:

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

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Definitions:

Direct Labor

The wages or salaries paid to employees who are directly involved in the production of goods or services.

Factory Employees

Workers employed in industrial production, typically involving manual labor or operation of machinery in a factory setting.

Raw Materials

Basic inputs and resources used in the manufacturing process to produce finished goods.

Cotter Pins

A pin or fastener used to secure two components together, preventing motion or separation after installation.