In a certain economy, when income is $1000 . consumer spending is $800 . The value of the multiplier for this economy is 2.5 . It follows that, when income is $1020, consumer spending is
a. $816 . For this economy, an initial increase of $100 in consumer spending translates into a $250 increase in aggregate demand.
b. $816 . For this economy, an initial increase of $100 in consumer spending translates into a $400 increase in aggregate demand.
c. $812 . For this economy, an initial increase of $100 in consumer spending translates into a $250 increase in aggregate demand.
d. $812 . For this economy, an initial increase of $100 in consumer spending translates into an $800 increase in aggregate demand.
c
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