contestada

If the marginal propensity to save is 0.2 in an economy, a $20 billion rise in investment spending will increase:
A) GDP by $120 billion.
B) saving by $25 billion.
C) GDP by $20 billion.
D) consumption by $80 billion

Respuesta :

ayokenny2001

Answer:

D. Consumption by $80 billion.

Explanation:

Marginal propensity to Save = 1 / MPS

= 1 / 0.2

= 5

= $20 billion × 5

= $100 billion

= $100 - $20

= $80 billion

Therefore, a $20 billion rise in investment spending will increase consumption by $80 billion.

Ritmeks

The investment spending will increase by $120 billion

The first step is to calculate the marginal propensity to spend

= 1/0.2

= 5

= 20 billion × 5

= 100 billion

= 100 billion + 20 billion

= 120 billion

Hence the investment spending will increase by $120 billion

Please see the link below for more information

https://brainly.com/question/6310148?referrer=searchResults