5. In an economy with lump-sum taxes and no international trade, if the marginal Propensity to consume is 0.8, which of the following is true?
(a) When consumption increases by $5, investment increases by a maximum of $1.
(b) When consumption increases by $5, savings increase by a maximum of $1.
(c) When investment increases by $1, income increases by a maximum of $5.
(d) When investment increases by $1, consumption increases by a maximum of $5.
(e) When income increases by $1, investment increases by a maximum of $5.
- 5. In an economy with lump-sum taxes and no international trade, if the marginal Propensity to consume is 0.8, which of the following is true?
- (a) When consumption increases by $5, investment increases by a maximum of $1.
- (b) When consumption increases by $5, savings increase by a maximum of $1.
- (c) When investment increases by $1, income increases by a maximum of $5.
- (d) When investment increases by $1, consumption increases by a maximum of $5.
- (e) When income increases by $1, investment increases by a maximum of $5.