If the Marginal Propensity to Consume Is 0

question 43

Multiple Choice

If the marginal propensity to consume is 0.8 and the real national income needs to be increased by $500 billion,then

• A)consumption spending needs to increase by $500 billion.
• B)saving needs to be reduced by $500 billion in order to generate the extra $500 billion.
• C)an increase in investment spending of $200 billion is needed to generate the desired increase of $500 billion.
• D)an increase in autonomous spending of $100 billion will lead to the increase of $500 billion.

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