In Macronesia, the MPC is approximately .80.If disposable income changes from 1,000 billion pukas to 1,500 billion pukas, then consumption will change by a(n)
A)decrease of 500 billion pukas.
B)increase of 500 billion pukas.
C)increase of 400 billion pukas.
D)increase of 800 billion pukas.

Question

Quizplus · Accepted Answer

The MPC is the change in consumption divided by the change in disposable income. In this case, the MPC is .80, so the change in consumption will be .80 * (1,500 billion pukas - 1,000 billion pukas) = 400 billion pukas.

In Macronesia, the MPC Is Approximately