If the marginal propensity to save is 0.4, then a $2 million increase in disposable income will
A) increase consumption by $5 million. B) decrease consumption by $1.2 million.
C) increase consumption by $1.2 million. D) decrease consumption by $5 million.
C
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What does this imply about the exchange rate of yen per dollar under the theory of purchasing power parity in the long run? A) The exchange rate of yen per dollar will be equal to 1.25. B) The exchange rate of yen per dollar will be greater than 0.8. C) The exchange rate of yen per dollar will be less than 0.8. D) The exchange rate of yen per dollar will be equal to 0.8.