An Increase in the Marginal Propensity to Consume (MPC) Will

question 41

Multiple Choice

An increase in the marginal propensity to consume (MPC) will, other things constant, _____

• A) increase the value of the multiplier.
• B) decrease the value of the multiplier.
• C) increase the marginal propensity to save.
• D) shift the aggregate expenditure curve downward.
• E) cause a downward movement along the aggregate expenditure curve.

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Definitions:

Budget Line

A budget line represents the combinations of two goods that a consumer can purchase with a specific budget, given the prices of those goods.

Utility Maximization

The process by which individuals choose consumption bundles that maximize their overall satisfaction or utility, subject to their budget constraints.

Indifference Map

A graphical representation that shows different bundles of goods between which a consumer is indifferent, reflecting their preferences and consumption choices.

Consumer Utility

The satisfaction or benefit a consumer receives from consuming a good or service.