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Let Real GDP =Y = Yd, and the Consumption Function

Question 36

Multiple Choice

Let real GDP =Y = Yd, and the consumption function is C = $1,000 + .06Y. JWhat is the value of autonomous consumption (A) and what is the marginal propensity to consume (MPC) ?


A) A = $600; MPC = 0.4
B) A = $1,000; MPC = 0.6
C) A = $1,600; MPC = 2.5
D) A = $2,500; MPC = 0.6

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