If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an economy, then consumption spending will increase by:
a. $6 billion
b. $14 billion.
c. $20 billion.
d. $28 billion.
e. $67 billion.
b
You might also like to view...
The short-run equilibrium of the firm under monopolistic competition has excess capacity.
Answer the following statement true (T) or false (F)
An agreement signed between Canada and the United States allowing free exchange of goods between them has aided the process of _____
a. privatization b. specialization c. globalization d. decentralization
Capital, as economists use the term, refers to
A. The cash needed to start a new business. B. The costs of operating a business. C. Final goods that are used to produce other goods and services. D. Shares of stock issued by businesses.
Changes in taxes, transfer payments, or government expenditures that naturally occur with the business cycle is known as
A) expansionary fiscal policy. B) contractionary fiscal policy. C) discretionary fiscal policy. D) automatic stabilizers.