If the government increases its spending by $200 million, and the marginal propensity to save (MPS) is 0.2, what will be the overall impact on national income, given a marginal propensity to consume (MPC) of 0.8?
1
$800 million
2
$1 billion
3
$1.25 billion
4
$1.6 billion
5
Question Not Attempted