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Economics (AS & A Level) · May / June 2025 · Paper 34 · Question 13

9708The circular flow of income

In a closed economy with no government, the level of consumption spending is determined by the equation C = a + bY. What does b represent in this equation?

  1. Aautonomous consumption
  2. Bautonomous investment
  3. Cthe average propensity to consume
  4. Dthe marginal propensity to consume

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Correct answer: D. the marginal propensity to consume

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