Explain multiplier and marginal propensity to consume (MPC).

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Chapter 25.A, Problem 1DQ

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Explain multiplier and marginal propensity to consume (MPC).

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Assume the marginal propensity to consume is 0.8. If consumer spending rises by $20 billion, then total income through the multiplier effect will: Increase by $100 billion Decrease by $100 billion Increase by $10 billion Will not change How do I calculate this?

A) What is the value of the marginal propensity to consume? ( Round your answers to one decimal place). What is the value of the marginal propensity to save? B) What is the break-even level of income in the table? (Enter your answer as a whole number) What is the term that economists use for the saving situation shown at the $ 240 level of income. C) For each of the following items, indicate wheter the value in the table is either constant or variable as income changes: The MPS is (constant/ variable) as income changes. The APC is ( constant/ variable) as income changes. The MPC is ( constant/ variable) as income changes. The APS is (constant/ variable) as income chnages.