Suppose an Increase in Planned Investment of $70 Billion Causes

question 126

Multiple Choice

Suppose an increase in planned investment of $70 billion causes equilibrium output demanded to rise by $280 billion.What is the value of the marginal propensity to consume?  

• A) 1/4 
• B) 1/3 
• C) 3/4 
• D) 4/3

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Definitions:

Tax-Reduction

Strategies or actions taken to minimize the amount of taxes owed by an individual or corporation.

Asset Cost

The total amount invested to acquire, produce, or improve a tangible or intangible asset, utilized for accounting and tax purposes.

Lease-Purchase Analysis

A financial evaluation technique used to determine the most cost-effective option between leasing an asset and purchasing it outright.

Sale and Leaseback

A financial transaction where one sells an asset and leases it back for the long-term; thus, one continues to be able to use the asset but does not own it.