Other things constant, how would a smaller marginal propensity to save affect the saving function?
A) The smaller the marginal propensity to save, the longer the saving function.
B) The smaller the marginal propensity to save, the shorter the saving function.
C) The smaller the marginal propensity to save, the flatter the saving function.
D) The smaller the marginal propensity to save, the steeper the saving function.

Question

Other things constant, how would a smaller marginal propensity to save affect the saving function?  
A) The smaller the marginal propensity to save, the longer the saving function. 
B) The smaller the marginal propensity to save, the shorter the saving function. 
C) The smaller the marginal propensity to save, the flatter the saving function. 
D) The smaller the marginal propensity to save, the steeper the saving function.

Quizplus · Accepted Answer

The marginal propensity to save is the amount of each additional dollar of income that is saved. A smaller marginal propensity to save means that a smaller portion of additional income is saved. Therefore, the saving function would be flatter (less steep) because there is less of an increase in saving for each unit increase in income.

Other Things Constant, How Would a Smaller Marginal Propensity to Save