If the average marginal propensity to consume is 0.8, then a $10 million increase in total income will lead to a increase in consumption. $80 million $0.8 million $8 million $2 million

The marginal propensity to consume out of permanent income equals 0.9 and the marginal propensity to consume out of transitory income equals 0.1. Suppose that there is an emergency increase in government spending of $200 billion to repair infrastructure. The spending takes place within a year. The spending increase is financed by a one-time increase in taxes. Prior to the increase in government spending, permanent income equals $9,600 billion and transitory income equals zero. (a) Compute the amounts of consumption expenditures and private saving prior to the tax increase. (b) Compute the amount of changes in consumption expenditures and private saving, given that the tax increase lasts for only one year. (c) Compute the initial change in aggregate demand that results from this combination of increases in government spending and taxes.

If Pat's incöme increased from $250,000 to $500,000 and his consumption increased from $200,000 to $300,000, what was his marginal propensity to consume? 0 04 0.6 0.8 0.9

The marginal propensity to consume is  a)the average amount of income that is consumed or spent b)the ratio of consumption to income c)the ratio of the change in consumption to a change in income d)the ratio of income to consumption