If the Marginal Propensity to Consume Increases

question 115

Multiple Choice

If the marginal propensity to consume increases,

• A)firms will increase production.
• B)spending will remain above output until interest rates increase and equilibrium is restored.
• C)the expenditure line will shift upward in a parallel fashion.
• D)investment will have to fall to restore equilibrium.
• E)too much output is being produced, and firms will cut production until equilibrium is restored.

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Definitions:

Carol Gilligan

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