The correct answer is option (4) : C, A, D, B
- C. MPC rises: An increase in the Marginal Propensity to Consume (MPC) means that households are spending a larger proportion of their income, which stimulates consumption.
- A. Investment multiplier rises: With a higher MPC, the consumption function's multiplier effect increases, leading to a larger impact on aggregate demand and economic activity.
- D. Income rises: Increased consumption and investment lead to higher aggregate demand, prompting firms to produce more, which in turn increases national income.
- B. Economy grows: Finally, as income rises continuously due to increased consumption and investment, the overall economy experiences growth.
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