Multiple Choice
Based on our understanding of the model presented in Chapter 3,we know that a reduction in c1 (where C = c0 + c1YD) will cause
A) the ZZ line to become steeper and a given change in autonomous consumption (c0) to have a smaller effect on output.
B) the ZZ line to become steeper and a given change in autonomous consumption (c0) to have a larger effect on output.
C) the ZZ line to become flatter and a given change in autonomous consumption (c0) to have a smaller effect on output.
D) the ZZ line to become flatter and a given change in autonomous consumption (c0) to have a larger effect on output.
Correct Answer:
Verified
Correct Answer:
Verified
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