Suppose That the Marginal Propensity to Consume Is 0

question 36

Multiple Choice

Suppose that the marginal propensity to consume is 0.8 and investment spending increases by $100 billion. The increase in real GDP is:

• A) $100 billion, the same amount as investment spending.
• B) $125 billion, composed of $100 billion in investment spending and $25 billion in consumption.
• C) $80 billion, composed of $100 billion in investment spending and a decrease in consumption of $20 billion.
• D) $500 billion, composed of $100 billion in investment spending and $400 billion in consumption.

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Definitions:

Unethical Practice

A behavior that goes against moral principles and professional standards.

Future Favors

Acts of kindness or assistance that are promised to be done in the future.

Mutual Obligation

A situational dynamic where two parties each have duties or services they are expected to perform for the benefit of the other.

Whistleblowing

The act of exposing any kind of information or activity within a private, public, or government organization that is deemed illegal, unethical, or not correct.