In the table given below Y represent the aggregate expenditure of the economy on C = consumption, I = investment, G = government projects, and X = net exports.
Table 9.3
$\begin{array}{c}
\text { Aggregate Expenditures }\
\begin{array}{|c|c|c|c|c|}
\hline \mathbf{Y} & \mathbf{C} & \mathbf{I} & \mathbf{G} & \mathbf{X} \
\hline \$ 0 & \$ 50 & \$ 75 & \$ 150 & \$ 40 \
\hline \$ 150 & \$ 125 & \$ 75 & \$ 150 & \$ 10 \
\hline \$ 300 & \$ 200 & \$ 75 & \$ 150 & -\$ 20 \
\hline \$ 450 & \$ 275 & \$ 75 & \$ 150 & -\$ 50 \
\hline \$ 600 & \$ 350 & \$ 75 & \$ 150 & -\$ 80 \
\hline
\end{array}
\end{array}$
-Refer to Table 9.3. Calculate the marginal propensity to consume in the economy.
A) 0.25
B) 0.50
C) 0.75
D) 0.80
E) 1.25

Question

In the table given below Y represent the aggregate expenditure of the economy on C = consumption, I = investment, G = government projects, and X = net exports.
Table 9.3
 $\begin{array}{c}
\text { Aggregate Expenditures }\
\begin{array}{|c|c|c|c|c|}
\hline \mathbf{Y} & \mathbf{C} & \mathbf{I} & \mathbf{G} & \mathbf{X} \
\hline \$ 0 & \$ 50 & \$ 75 & \$ 150 & \$ 40 \
\hline \$ 150 & \$ 125 & \$ 75 & \$ 150 & \$ 10 \
\hline \$ 300 & \$ 200 & \$ 75 & \$ 150 & -\$ 20 \
\hline \$ 450 & \$ 275 & \$ 75 & \$ 150 & -\$ 50 \
\hline \$ 600 & \$ 350 & \$ 75 & \$ 150 & -\$ 80 \
\hline
\end{array}
\end{array}$
-Refer to Table 9.3. Calculate the marginal propensity to consume in the economy.
A) 0.25
B) 0.50
C) 0.75
D) 0.80
E) 1.25

Quizplus · Accepted Answer

We can calculate the marginal propensity to consume by taking the change in consumption and dividing it by the change in income. From the table, we can see that as income increases by $150, consumption increases by $125 - $50 = $75. Therefore, the marginal propensity to consume is 75/150 = 0.50.

In the Table Given Below Y Represent the Aggregate Expenditure