K
Kalena Lena~
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I need to figure it out, its from my study guide and I have finals tomorrow.
In an economy with lump-sum taxes and no international trade, if the MPC is .8, which of the following is true?
a. When consumption increases by $5, investment increases by a maximum of $1.
b. When consumption increases by $5, savings increase by a maximum of $1.
c. When investment increases by $1, income increases by a maximum of $5.
d. When investment increases by $1, consumption increases by a maximum of $5.
e. When income increases by $1, investment increases by a maximum of $5.
In an economy with lump-sum taxes and no international trade, if the MPC is .8, which of the following is true?
a. When consumption increases by $5, investment increases by a maximum of $1.
b. When consumption increases by $5, savings increase by a maximum of $1.
c. When investment increases by $1, income increases by a maximum of $5.
d. When investment increases by $1, consumption increases by a maximum of $5.
e. When income increases by $1, investment increases by a maximum of $5.