If the Marginal Propensity to Consume Is 0

Multiple Choice

If the marginal propensity to consume is 0.8, a $200 billion increase in government purchases, other things constant, would:

A) increase consumption in the first round by $80 billion and overall aggregate demand by $400 billion.
B) increase consumption in the first round by $160 billion and overall aggregate demand by $1 trillion.
C) increase consumption in the first round by $200 billion and overall aggregate demand by $1 trillion.
D) increase consumption in the first round by $800 billion and overall aggregate demand by $4 trillion
E) increase consumption in the first round by $400 billion and overall aggregate demand by $4 trillion.