When income increases,aggregate expenditure will rise by
A) the change in GDP
B) the change in GDP minus the MPC
C) the change in GDP times the MPC
D) the MPC
E) the change in GDP divided by the MPC

Question

Quizplus · Accepted Answer

The MPC represents the marginal propensity to consume, which is the portion of additional income that is spent on consumption. Therefore, the change in aggregate expenditure is equal to the change in GDP times the MPC. Option A and B are not correct because they do not take into account the MPC. Option D is incorrect because it only represents the MPC, not the effect of the change in income. Option E is incorrect because it divides the change in GDP instead of multiplying it by the MPC.

When Income Increases,aggregate Expenditure Will Rise by