The slope of the aggregate expenditure curve increases when the marginal propensity to consume ________ or the marginal propensity to import ________.
A) increases; decreases
B) decreases; increases
C) decreases; decreases
D) increases; increases

Question

Quizplus · Accepted Answer

The slope of the aggregate expenditure curve increases when the marginal propensity to consume increases because it means consumers are spending a larger portion of any additional income, boosting aggregate expenditure. Similarly, when the marginal propensity to import decreases, it implies that less of the additional income is spent on imports, keeping more spending within the economy, thus also increasing the slope of the aggregate expenditure curve.

The Slope of the Aggregate Expenditure Curve Increases When the Marginal