Let the Marginal Leakage Rate Be 0

Multiple Choice

Let the marginal leakage rate be 0.5 while the marginal propensity to consume is 0.8.Then a $50 million reduction in autonomous taxes will cause autonomous consumption to ________ and equilibrium income to ________.

A) fall by $50 billion;fall by $100 billion
B) rise by $50 billion;rise by $100 billion
C) fall by $40 billion;fall by $200 billion
D) rise by $40 billion;rise by $80 billion