10

Based on our understanding of the model presented in Chapter 3, we know that an increase in c1 (where C = c0 + c1YD) will cause

Select one:

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 larger effect on output.

D.

the ZZ line to become flatter and a given change in autonomous consumption (c0) to have a smaller effect on output.