Question

An additional investment of SR 50 billion in the Saudi economy creates how much additional income
if the marginal propensity to consume (mpc) is equal to 0
Select one:
O A. SR 50 billion;
O B. SR 150 billion
O C. SR 25 billion;
O D. SR 100 billion;​

Answer 1

Answer:

Saudi Arabia has been taking steps to shore up its economy from the double whammy of the coronavirus and lower crude prices. The economy is set to shrink 6.8% this year, according to the International Monetary Fund, in what would be the deepest co...

Answer 2

Answer:

An additional investment of SR 50 billion in the Saudi economy creates SR 50 billion in additional income if the marginal propensity to consume (mpc) is equal to 0.

Explanation:

Given:

MPC = 0

Investment = SR 50 billion

To Find:

The Additional Income generated

Formula:

$MPC=\frac{C}{Y}$

• The marginal propensity to consume quantifies a consumer's level of spending or saving in proportion to an overall wage increase.
• Or, to put it another way, what portion of an individual's increased income

Solution:

If MPC =0

Then the Consumption will be equal to Income.

So, if there is an increase in the investment of 50 billion SR then the money or the investment will be used for the purpose of consumption to boost the economy.

This will lead to a generation of additional income of SR 50 billion.

A. SR 50 billion

#SPJ2