Given the consumption function C = $500 billion + 0.80Y, an increase in disposable income from $6,000 billion to $7,000 billion will cause consumption to increase by:
A)$800 billion.
B)$1,000 billion.
C)$1,300 billion.
D)$1,500 billion.
E)$1,800 billion.

Question

Quizplus · Accepted Answer

An increase in disposable income of $1,000 billion will cause consumption to increase by $800 billion (0.80 x $1,000 billion).

Given the Consumption Function C = $500 Billion + 0