The Amount of Consumption That Takes Place When Real Gdp
The amount of consumption that takes place when real GDP equals zero is called induced
If consumption increases by $75 billion when disposable personal income increases by
$100, the marginal propensity to consume is 0.75.
If consumption is $80 billion when income is $100, the most likely value for the marginal propensity to consume is 0.8.
In the aggregate expenditures model, if a $40 billion increase in autonomous investment leads to an increase in equilibrium real GDP of $100 billion at the initial price level, then the multiplier is 2.5.