Suppose Real GDP Is $800 Billion When the MPC Is

Multiple Choice

Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase their saving by $30 billion. Before this change, the economy was in equilibrium with people intending to save $100 billion and producers intending to invest $100 billion. The new equilibrium level of real GDP is:

A) $600 billion.
B) $650 billion.
C) $680 billion.
D) $730 billion.
E) $800 billion.