In an Economy Where the Only Leakage Economy Is Saving

Multiple Choice

In an economy where the only leakage economy is saving, the marginal propensity to consume for the economy is 0.8. If government spending in the economy increases by $200, then the overall spending in the economy will _____ by:

A) increase; $800.
B) decrease; $800.
C) increase; $1,000.
D) decrease; $1,000.