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:

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