Suppose the MPC Is 0

question 182

Multiple Choice

Suppose the MPC is 0.9.If autonomous consumption spending increases by $20 billion,equilibrium output will

• A) increase by $22.2 billion
• B) increase by $200 billion
• C) not change because the MPC only changes consumption when income changes
• D) not change because the expenditures multiplier only applies to changes in investment spending and government purchases
• E) increase by $18 billion.