Suppose the Government Believes Consumers Should Spend $1 Billion More

Multiple Choice

Suppose the government believes consumers should spend $1 billion more to get the economy out of a recession. The government wants to provide income to households by providing them with jobs and paying them directly. If the marginal propensity to consume is 0.8, the government should increase income by:

A) $0.8 billion
B) $1 billion.
C) $0.2 billion.
D) This cannot be determined with the information given.