Suppose the MPC Is 0

question 60

Multiple Choice

Suppose the MPC is 0.8 in Canada and the MPC is 0.55 at Home. If income increases by $100 million in Canada, then the increase in consumption of domestic goods will be:

• A) $25 million.
• B) $80 million.
• C) $55 million.
• D) $35 million.

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Definitions:

Pre-Tax-And Transfer Income

Income before any taxes are deducted or any government assistance or welfare payments are added.

Poverty Rate

The percentage of the population living below the poverty line, where the poverty line is the minimum level of income deemed adequate in a specific country.

Income Range

The spread between the lowest and highest income levels within a given group.

Demographic Variables

Characteristics of populations, such as age, gender, income, and education, that are used in social science research to study differences or changes in a group.