Assuming that investment,government expenditures,and net exports are all autonomous,the marginal propensity to consume for the economy represented in Figure 9.9 is
A)1.0 since aggregate expenditure is a straight line.
B)0.5.
C)0.25.
D)Indeterminate since there is no consumption function.

Question

Assuming that investment,government expenditures,and net exports are all autonomous,the marginal propensity to consume for the economy represented in Figure 9.9 is 
A)1.0 since aggregate expenditure is a straight line. 
B)0.5. 
C)0.25. 
D)Indeterminate since there is no consumption function.

Quizplus · Accepted Answer

In Figure 9.9, the slope of the aggregate expenditure line is equal to the marginal propensity to consume (MPC). Since the line has a slope of 0.5, the MPC for the economy is also 0.5.

Assuming That Investment,government Expenditures,and Net Exports Are All Autonomous,the Marginal