If the MPC equals 0.75,a $100 billion transfer payment decrease will decrease consumption in the first round by

Name: If the MPC equals 0.75,a $100 billion transfer payment decrease will decrease consumption in the first round by
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Quizplus · Accepted Answer

The MPC (marginal propensity to consume) of 0.75 means that for every $1 decrease in transfer payments, consumption will decrease by $0.75. Therefore, a $100 billion transfer payment decrease will result in a $75 billion decrease in consumption in the first round.

If the MPC Equals 0