2.8 Consider the following model Y = C+I+G C =a-bT +b(1-k)Y G=G D=G-T-KY An increase in the marginal propensity to consume would A. shift/rotate the C+1+G line downwards B. shift the C+I÷G line upwards with no change in private investment C. shift the C+I+G line upwards and increases private investment due to increase in output D. shift the C+I÷G line upwards but the effect on private consumption is ambiguous E. None of the above
2.8 Consider the following model Y = C+I+G C =a-bT +b(1-k)Y G=G D=G-T-KY An increase in the marginal propensity to consume would A. shift/rotate the C+1+G line downwards B. shift the C+I÷G line upwards with no change in private investment C. shift the C+I+G line upwards and increases private investment due to increase in output D. shift the C+I÷G line upwards but the effect on private consumption is ambiguous E. None of the above
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 5.10P
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