In Macroland autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. The slope of the Expenditure Line is:
A) 0.25.
B) 0.75.
C) 290.
D) 320.

Question

Quizplus · Accepted Answer

The slope of the Expenditure Line is equal to the marginal propensity to consume, which is 0.75.

In Macroland Autonomous Consumption Equals 100, the Marginal Propensity to Consume