Economics · Macroeconomics
In the context of the IS-LM model, a higher marginal propensity to spend results in:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1An increase in the demand for real balances
- 2An increase in aggregate demand and a rightward shift of the IS curve
- 3A steeper aggregate demand curve and consequently a flatter IS curve✓
- 4A flatter aggregate demand curve and consequently a steeper IS curve
Correct answer
A steeper aggregate demand curve and consequently a flatter IS curve
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