If the Marginal Propensity to Save Is 0

question 41

Multiple Choice

If the marginal propensity to save is 0.4,then a $2 million increase in disposable income will

• A)increase consumption by $5 million.
• B)increase consumption by $1.2 million.
• C)decrease consumption by $5 million.
• D)decrease consumption by $1.2 million.

---

Definitions:

Cinnamon Buns

A sweet pastry that consists of a rolled sheet of dough upon which a cinnamon and sugar mixture is spread before being rolled into a log shape and sliced into individual portions that are baked.

Bagels

A dense, doughnut-shaped bread roll, typically boiled before being baked, originating from the Jewish communities of Poland.

Unjust Enrichment

A legal principle stating one party should not be allowed to profit at another's expense without making restitution for the fair market value of any benefits received.

Legal Obligations

Duties enforced by law that a person or entity is required to fulfill.