If Consumption Decreases from $600 Billion to $575 Billion and the Marginal

question 207

Multiple Choice

If consumption decreases from $600 billion to $575 billion and the marginal propensity to consume is 0.8, then equilibrium income will:

• A) fall by $25 billion.
• B) fall by $125 billion.
• C) rise by $25 billion.
• D) rise by $125 billion.

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