Refer to the dlagram given below. Consumption Income The diagram given above shows consumptlon schedules. As Income rises, the marginal propensity to consume remains constant for. Multiple Cholce O only C3 O only Cq. C2. and C3. none of the consumption schedules.

Consider the problem of an individual that has Y dollars to spend on consuming over wo periods. Let c1 denote the amount of consumption that the individual would like co purchase in period 1 and c2 denote the amount of consumption that the individual would like to consume in period 2. The individual begins period 1 with Y dollars and can purchase ci units of the consumption good at a price P and can save any unspent wealth. Use s1 to denote the amount of savings the individual chooses to hold at the end of period 1. Any wealth that is saved earns interest at rate r so that the amount of wealth the ndividual has at his/her disposal to purchase consumption goods in period 2 is (1+r)s1. This principal and interest on savings is used to finance period 2 consumption. Again, for simplicity, we can assume that it costs P2 dollars to buy a unit of the consumption good in period 2.

Let C 40+ 0.8y and I = 10. The value of the marginal propensity to consume is OA. 40. OB. 0.4. OC. 0.8. OD. 8.