If disposable income rises by $100 billion and personal consumption expenditure rises by $60 billion,what is the marginal propensity to consume?
A) 0.60
B) 0.40
C) 1.60
D) 1.66
E) 2.50

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated by dividing the change in personal consumption expenditure by the change in disposable income. Here, MPC = $60 billion / $100 billion = 0.60.

If Disposable Income Rises by $100 Billion and Personal Consumption