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In Macroland, Autonomous Consumption Equals 100, the Marginal Propensity to Consume

Question 43

Multiple Choice

In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Induced expenditure equals:


A) 0.25Y.
B) 320 + 0.25Y.
C) 0.75Y.
D) 290 + 0.75Y.

Correct Answer:

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