Assume That the Marginal Propensity to Consume Equals 0

question 106

Multiple Choice

Assume that the marginal propensity to consume equals 0.75 and the marginal propensity to import equals 0.10.By how much does spending on domestic goods increase if income increases by $300?

• A)$195
• B)$225
• C)$30
• D)$300
• E)$75

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Definitions:

Indifference Curves

Graphical representations used in microeconomics to illustrate different combinations of two goods that provide the same level of utility to a consumer.

Chardonnay

A variety of green-skinned grapes used in the production of white wine, characterized by its versatility and flavor profile.

Quiche

A savory, open-faced pastry crust filled with a mixture of eggs, milk, cheese, and sometimes meat or vegetables.

Utility Function

A mathematical representation of how choices lead to satisfaction levels for consumers, indicating preferences among various sets of goods and services.