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    IS curve

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    An increase in the marginal propensity to _____will decrese the size of the expenditure multiplier (a) and therefore the IS curve will shift to the ____and become steeper. If people save more and spend less, firms will experience an increase in unintended inventories. Firms will respond by decresing production and national income will ____.

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    An increase in the marginal propensity to SAVE will decrease the size of the ...

    Solution Summary

    This solution will go through economic reactions within the context of expenditure multipliers.