Other things constant, how would a larger marginal propensity to save affect the saving function?
A) The saving function would remain the same.
B) The saving function would be negative.
C) The saving function would be steeper.
D) The saving function would be flatter.

Question

Other things constant, how would a larger marginal propensity to save affect the saving function?  
A) The saving function would remain the same. 
B) The saving function would be negative. 
C) The saving function would be steeper. 
D) The saving function would be flatter.

Quizplus · Accepted Answer

A larger marginal propensity to save means that for every additional dollar earned, individuals will save a larger proportion of it instead of spending it. This would lead to a steeper saving function, as there is a greater increase in saving for every increase in income.

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