If the Marginal Propensity to Consume Is Equal to 0

question 50

Multiple Choice

If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an economy,then consumption spending will increase by:

• A)$6 billion.
• B)$14 billion.
• C)$20 billion.
• D)$28 billion.
• E)$67 billion.

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Definitions:

Construct Validation

The strategy of establishing the validity of a measure by comparing it with a wide range of other measures.

Internal Validation

The process of seeking or achieving a sense of validation or approval from oneself rather than from external sources.

Experimental Method

A scientific approach used to test hypotheses under controlled conditions.

Causal Variable

A causal variable is a factor that brings about change in another variable or set of variables, establishing a cause-and-effect relationship.