If the Marginal Propensity to Consume Is 0

question 79

Multiple Choice

If the marginal propensity to consume is 0.75 and transfer payments increase by $30 billion, real GDP will:

• A)increase by exactly $30 billion.
• B)decrease by exactly $30 billion.
• C)increase by more than $120 billion.
• D)increase by less than $120 billion.

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Definitions:

Production Costs

The total expense incurred in manufacturing goods or providing services, including raw materials, labor, and overhead expenses.

Chemicals

Substances used in or produced by chemical processes, often referring to compounds or materials in industrial, scientific, or consumer products.

Labor

The effort of humans, encompassing both mental and physical work, utilized in creating goods and services.

Effluent Fee

A charge levied on the quantity of pollution discharged into the environment, aiming to control environmental pollution.