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AP® Macroeconomics

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Moderate

MPC and Real Interest Rates

APMACR-YETTJV

Suppose marginal propensity to consume moved from .8 to .7.

Which of the following outcomes is most likely?

A

Real interest rates will fall.

B

Real interest rates will remain unchanged

C

Real interest rates will rise.

D

The quantity of loans made will decrease.

E

Federal budget deficit increase.