ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An increase in the marginal propensity to consume creates a steeper aggregate demand curve. The point of origin is the same, but steeper line crosses the equilibrium line at a higher point. This results in larger equilibrium values for aggregate demand and national income.

Detailed explanation-2: -Understanding Marginal Propensity to Save The amount is expressed as a percentage, and a higher proportion indicates that an individual receives a higher income and hence demonstrates a greater ability to satisfy their needs. Usually, a higher income translates to a higher MPS.

Detailed explanation-3: -The aggregate demand curve tends to shift to the left when total consumer spending declines. 2 Consumers might spend less because the cost of living is rising or because government taxes have increased. Consumers may decide to spend less and save more if they expect prices to rise in the future.

Detailed explanation-4: -The aggregate demand curve, or AD curve, shifts to the right as the components of aggregate demand-consumption spending, investment spending, government spending, and spending on exports minus imports-rise. The AD curve will shift back to the left as these components fall.