In macroeconomic theory, a decrease in the marginal propensity to consume (MPC) will lead to which of the following outcomes?

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Economics · Macroeconomics

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

Both decrease the overall aggregate demand and lead to a decrease in the equilibrium level of income or output

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Answer 1

Decrease the overall aggregate demand of the economy only

Answer 2

Lead to a decrease in the equilibrium level of income or output only

Answer 3

Both decrease the overall aggregate demand and lead to a decrease in the equilibrium level of income or output

Answer 4

Neither decrease the overall aggregate demand nor lead to a decrease in the equilibrium level of income or output

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