If the Marginal Propensity to Save Is 0

question 45

Multiple Choice

If the marginal propensity to save is 0.2 in an economy, a $20 billion rise in investment spending will increase

• A) GDP by $120 billion.
• B) GDP by $20 billion.
• C) saving by $25 billion.
• D) consumption by $80 billion.

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Definitions:

Correlation Coefficient

A numerical index that reflects the degree of linear relationship between two variables, ranging from -1 to +1.

Variable

An element, feature, or factor that is likely to vary or change; in research, it is something that is measured or manipulated to assess its effects on an outcome.

Statistic

A numerical value that describes or summarizes some aspect of a set of data.

Distribution

The way in which values in a dataset are spread out or clustered across a range.