Suppose the Value of the Marginal Propensity to Consume (MPC)

question 62

Multiple Choice

Suppose the value of the marginal propensity to consume (MPC) in a closed economy is 0.75, autonomous consumption is £300 and national output is 1500. If the tax rate is 8%, what is the level of consumption in the economy?

• A) £1035
• B) £1335
• C) £1380
• D) £465

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