Suppose Lower Expectations Lead to a Decrease of $240 in Desired

Multiple Choice

Suppose lower expectations lead to a decrease of $240 in desired investment in the economy and the marginal propensity to consume is 0.75. Table 10.2
$\begin{array}{c}\begin{array}{|l|}\hline\\ \text {Spending Cycles}\\\hline \text {First-cycle}\\\text {spending}\\\hline \text {Second-cycle}\\\text {spending}\\\hline \text {Third-cycle}\\\text {spending}\\\hline \end{array}\begin{array}{c|}\hline \text {Change in this Cycle's Spending}\\\text { and Income}\\\hline\\\quad\quad\quad\quad\quad\quad\quad\quad -\$ 240 \\\hline\\\\\hline\\\\\hline\end{array}\begin{array}{c|}\hline \text {Cumulative Decrease in }\\ \text {Spending and Income}\\\hline\\\quad\quad\quad\quad\quad\quad\quad\quad -\$240\\\hline\\\\\hline\\\\\hline\end{array}\end{array}$


In Table 10.2,what is the change in the third cycle of spending resulting from the initial drop in investment?

A) -$135.00.
B) -$180.00.
C) -$420.00.
D) -$555.00.