If an Initial Increase in Government Spending of $100 Billion

question 101

Multiple Choice

If an initial increase in government spending of $100 billion leads to a total increase of $400 billion in income,the marginal propensity to consume in the economy is

• A) 0.4.
• B) -0.8.
• C) 0.5.
• D) 0.75.
• E) 0.8.

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Definitions:

Exchange Of Money

The act of giving one form of currency in return for another, which can occur in financial transactions, currency exchange, or the purchase of goods and services.

Acceptance

The act of agreeing to a proposal or offer, thereby creating a binding contract upon meeting the terms of the offer.

Seller's Offer

A proposal by a seller to sell goods or services under specified terms and conditions to a buyer.

Void Contract

A legal agreement that is invalid from the outset and has no legal effect due to circumstances of its formation.