Answer to Question #253471 in Financial Math for Millicent

Question

Which of the following statements are correct?

a. If the marginal propensity to consume increases, the equilibrium level of income will increase.

b. In an open economy with a government sector the sum of the marginal propensity to consume and the marginal propensity to save is always equal to 1.

c. If the tax rate decreases, the aggregate spending curve will shift parallel upwards.

Select one:

A. b

B. b and c

C. a and b

D. a and c

Answer 1

C. a and b