If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is
A)4.
B)0.75.
C)0.5.
D)0.25.
E)0.1.

Name: If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is A)4. B)0.75. C)0.5. D)0.25. E)0.1.
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Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated by dividing the change in consumption by the change in income, which is $5 million / $20 million = 0.25.

If National Income Increases by $20 Million and Consumption Increases