Suppose the Marginal Propensity to Consume Equals 0

question 90

Multiple Choice

Suppose the marginal propensity to consume equals 0.9 and investment spending increases by $50 billion. Assuming no taxes and no trade, real GDP will _____ by _____.

• A) increase; $450 billion
• B) increase; $90 billion
• C) increase; $500 billion
• D) decrease; $500 billion

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Definitions:

Penetration

The process of entering or making an entrance into a market with the aim to establish a significant foothold or presence.

Bundle Pricing

A marketing strategy where multiple products or services are packaged together and sold at a single price.

Tie-In Pricing

A marketing strategy that sells one product at a discount when bought together with another product.

Multi-Product Pricing

A strategy where businesses set different price levels for various products in their lineup, aiming to maximize profitability across the range.