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: O a. $20 billion. O b. $14 billion. O c. $6 billion. O d. $67 billion. O e. $28 billion.

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: O a. $20 billion. O b. $14 billion. O c. $6 billion. O d. $67 billion. O e. $28 billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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. $20 billion.
O b. $14 billion.
c. $6 billion.
d. $67 billion.
e. $28 billion.

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With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that O consumption spending is more than $8 trillion because taxes have been paid. O consumption spending is less than $8 trillion because taxes must be paid. autonomous consumption spending is $8 trillion. O consumption spending is $8 trillion when disposable income is $8 trillion.