Economics (AS & A Level) · May / June 2026 · Paper 34 · Question 19

In a closed economy with no government, the full employment level of income is $400 billion and the equilibrium level of income is $350 billion. If the deflationary gap is $10 billion, what is the marginal propensity to consume?

1. A$\frac{1}{5}$
2. B$\frac{1}{4}$
3. C$\frac{3}{4}$
4. D$\frac{4}{5}$

As printed in the paper