If a $1,000 Increase in Income Leads to an $800

question 77

Multiple Choice

If a $1,000 increase in income leads to an $800 increase in consumption expenditures,then the marginal propensity to consume is

• A)0.2 and the multiplier is 1.25.
• B)0.8 and the multiplier is 5.
• C)0.2 and the multiplier is 1.25
• D)0.8 and the multiplier is 8.

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Definitions:

Autonomic

Relating to the part of the nervous system that controls involuntary actions of the body, such as heart rate and digestion.

Sympathetic

Refers to the part of the autonomic nervous system that accelerates heart rate, constricts blood vessels, and raises blood pressure.

Sympathetic

Showing feelings of pity and sorrow for someone else's misfortune; understanding between people; common feeling.

Parasympathetic

Relating to the part of the autonomic nervous system responsible for rest and digestion, counterbalancing the sympathetic nervous system.