If the Marginal Propensity to Consume Is

question 159

Multiple Choice

If the marginal propensity to consume is.80 and both taxes and government purchases increase by $50 billion, GDP will:

• A)increase by $50 billion.
• B)decrease by $50 billion.
• C)increase by $10 billion.
• D)decrease by $10 billion.

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Definitions:

Bottom Fifth

A term referring to the lowest 20% of a population or group in terms of income, wealth, or other socioeconomic measures.

Highest Quintile

Refers to the top 20 percent of a population or group, often measured in terms of income or wealth, indicating those with the highest earnings or assets.

Total Income

The sum of all earnings received by an individual or entity, usually within a specific time frame, including wages, investments, and other sources of revenue.

Highest Quintile

The top 20 percent of the population or distribution in a given set of data, often used in reference to income or wealth distribution.