-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would
A) decrease.
B) stay the same but the AE curve would shift upwards.
C) stay the same but the AE curve would shift downwards.
D) increase.

Question

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would
A) decrease. 
B) stay the same but the AE curve would shift upwards. 
C) stay the same but the AE curve would shift downwards. 
D) increase.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) determines the slope of the Aggregate Expenditure (AE) curve. If the MPC increases, it means that for every additional unit of income, consumption increases by a larger amount, thus steepening the slope of the AE curve.

-In the Above Figure, If the Marginal Propensity to Consume