In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. The slope of the expenditure line is:
A)0.25.
B)0.75.
C)290.
D)320.

Question

Quizplus · Accepted Answer

The marginal propensity to consume is the slope of the expenditure line. In this case, the marginal propensity to consume is 0.75.

In Macroland, Autonomous Consumption Equals 100, the Marginal Propensity to Consume