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
$\begin{array}{c}
\text { Aggregate Expenditures }\
\begin{array}{|c|c|c|c|c|}
\hline \mathbf{Y} & \mathbf{C} & \mathbf{I} & \mathbf{G} & \mathbf{X} \
\hline \$ 0 & \$ 50 & \$ 75 & \$ 150 & \$ 40 \
\hline \$ 150 & \$ 125 & \$ 75 & \$ 150 & \$ 10 \
\hline \$ 300 & \$ 200 & \$ 75 & \$ 150 & -\$ 20 \
\hline \$ 450 & \$ 275 & \$ 75 & \$ 150 & -\$ 50 \
\hline \$ 600 & \$ 350 & \$ 75 & \$ 150 & -\$ 80 \
\hline
\end{array}
\end{array}$
-According to Table 9.3, what is the marginal propensity to import?
A) -0.20
B) 0.40
C) -0.50
D) 0.75
E) -0.80

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
 $\begin{array}{c}
\text { Aggregate Expenditures }\
\begin{array}{|c|c|c|c|c|}
\hline \mathbf{Y} & \mathbf{C} & \mathbf{I} & \mathbf{G} & \mathbf{X} \
\hline \$ 0 & \$ 50 & \$ 75 & \$ 150 & \$ 40 \
\hline \$ 150 & \$ 125 & \$ 75 & \$ 150 & \$ 10 \
\hline \$ 300 & \$ 200 & \$ 75 & \$ 150 & -\$ 20 \
\hline \$ 450 & \$ 275 & \$ 75 & \$ 150 & -\$ 50 \
\hline \$ 600 & \$ 350 & \$ 75 & \$ 150 & -\$ 80 \
\hline
\end{array}
\end{array}$
-According to Table 9.3, what is the marginal propensity to import?
A) -0.20
B) 0.40
C) -0.50
D) 0.75
E) -0.80

Quizplus · Accepted Answer

The marginal propensity to import is the change in net exports divided by the change in aggregate expenditure. From Y = $150 to Y = $300, X changes from $10 to -$20, a change of -$30. The change in Y is $150. Thus, the marginal propensity to import is -$30/$150 = -0.20.

In the Table Given Below Y Represent the Aggregate Expenditure