A Reduction in the Marginal Propensity to Save from

question 20

Multiple Choice

A reduction in the marginal propensity to save from .4 to .3 will cause

• A)the ZZ line to become steeper 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 a larger effect on output.
• C)the ZZ line to become flatter and a given change in autonomous consumption (c₀)to have a smaller effect on output.
• D)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:

Good Neighbor Policy

A foreign policy adopted by the United States in the 1930s, aimed at strengthening friendly relations and mutual defense with the countries of Latin America.

Herbert Hoover's Policies

Involved a hands-off approach to the economy, emphasizing the importance of voluntary cooperation between businesses and workers rather than government intervention.

Fascism

A far-right, authoritarian ultranationalism characterized by dictatorial power, forcible suppression of opposition, and strong regimentation of society and the economy.

Political System

An organized framework of governance, defining how power is obtained and exercised in a society, including institutions and processes.