If a $1,000 Increase in Income Leads to an $800

question 111

Multiple Choice

If a $1,000 increase in income leads to an $800 increase in consumption expenditures, then the marginal propensity to consume is

• A)0.2 and the multiplier is 1.25.
• B)0.8 and the multiplier is 5.
• C)0.2 and the multiplier is 5.
• D)0.8 and the multiplier is 8.

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