Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions
Exhibit: Aggregate Expenditures (AE)
in a Simplified Economy

-(Exhibit: Aggregate Expenditures (AE)
In a Simplified Economy)
Consider a simple economy that is made up of only two sectors, households and firms, and that all investment is autonomous.Further, disposable personal income = real GDP and the economy is currently producing at its level of potential real GDP.What is the marginal propensity to consume in this economy?

A) 0.5
B) 0.6
C) 0.75
D) 0.8