If the level of autonomous spending is $6000 billion, the marginal propensity to expend is .4, and the level of national income is $8000, planned expenditures would be equal to
A) $9200 billion and inventory accumulation would equal $1200 billion.
B) $10800 billion and inventory accumulation would equal -$2800 billion.
C) $9200 billion and inventory accumulation would equal -$1200 billion.
D) $10800 billion and inventory accumulation would equal $2800 billion.

Question

Quizplus · Accepted Answer

Planned expenditures = Autonomous spending + (Marginal propensity to expend * National income) = $6000 billion + (0.4 * $8000 billion) = $9200 billion. Inventory accumulation = National income - Planned expenditures = $8000 billion - $9200 billion = -$1200 billion.

If the Level of Autonomous Spending Is $6000 Billion, the Marginal