Multiple Choice
Suppose the marginal propensity to consume is 0.80 and taxes decrease by $10 billion.Which of the following is true?
A) Disposable income and consumption fall by $10 billion
B) Disposable income and consumption rise by $10 billion
C) Disposable income rises by $10 billion and consumption rises by $8 billion
D) Disposable income falls by $10 billion and consumption falls by $8 billion
E) Disposable income rises by $10 billion and consumption falls by $8 billion
Correct Answer:
Verified
Correct Answer:
Verified
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