Suppose That Investment Spending Increases by $50 Billion and as a Result

question 45

Multiple Choice

Suppose that investment spending increases by $50 billion and as a result the equilibrium income increases by $200 billion. The value of the marginal propensity to consume is:

• A) 0.8.
• B) 0.4.
• C) 0.75.
• D) 4.

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Definitions:

Autonomic Fibres

Nerve fibers that are part of the autonomic nervous system, controlling involuntary bodily functions such as heart rate and digestion.

Sympathetic Fibres

Nerve fibers of the sympathetic nervous system that are involved in the body's fight or flight response, affecting functions such as heart rate and blood pressure.

Afferent Nervous System

Part of the peripheral nervous system that carries sensory information from the sensory organs to the brain.

Efferent Nervous System

Part of the nervous system responsible for carrying signals away from the central nervous system towards muscles to cause movement.