Which of the following changes in disposable income would lead to the smallest increase in consumption?
A)a $30 000 increase in disposable income, if MPC equals 0.25
B)a $15 000 increase in disposable income, if MPC equals 0.6
C)a $20 000 increase in disposable income, if MPC equals 0.5
D)a $12 000 increase in disposable income, if MPC equals 0.75

Question

Quizplus · Accepted Answer

The increase in consumption is calculated as the increase in disposable income multiplied by the marginal propensity to consume (MPC). For option A, the increase is $30,000 * 0.25 = $7,500, which is the smallest among the options.

Which of the Following Changes in Disposable Income Would Lead