Solved: Suppose that the marginal propensity to consume decreases, Macroeconomics

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Suppose that the marginal propensity to consume decreases

Question from Intermediate Macroeconomics (ECON 3102) - Consider a simple 2-period MONETARY model. Suppose that the MARGINAL PROPENSITY TO CONSUME decreases (consumers spend a smaller share of their income on consumption). Explain how the equilibrium changes.

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Macroeconomics: Suppose that the marginal propensity to consume decreases

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