If the Marginal Propensity to Consume Is Equal to 0

question 50

Multiple Choice

If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an economy,then consumption spending will increase by:

• A)$6 billion.
• B)$14 billion.
• C)$20 billion.
• D)$28 billion.
• E)$67 billion.

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Definitions:

Conditioned Response

A learned reaction to a conditioned stimulus that occurs because of prior conditioning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually triggers a conditioned response.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention.

Unconditioned Response

An automatic, natural response to a stimulus that occurs without prior learning or conditioning.