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If a $1,000 Increase in Income Leads to an $800

Question 77

Multiple Choice

If a $1,000 increase in income leads to an $800 increase in consumption expenditures,then the marginal propensity to consume is

A) 0.2 and the multiplier is 1.25.
B) 0.8 and the multiplier is 5.
C) 0.2 and the multiplier is 1.25
D) 0.8 and the multiplier is 8.

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