Suppose That, at the Equilibrium Level of Income in a Country

Multiple Choice

Suppose that, at the equilibrium level of income in a country, the country has a current Account (X-- M) deficit of 60. The country's marginal propensity to consume = 0.7, and the country's marginal propensity to import = 0.2. If contraction in imports by means Of reducing national income is the method to be used to eliminate the current account Deficit, by how much must national income be reduced?

A) 30
B) 60
C) 120
D) 300