The table given below shows the values of different components of aggregate expenditure of an economy.The marginal propensity to consume (MPC)equals:
Table 9.2

A)0.20 or 1/5.
B)0.40 or 2/5.
C)0.80 or 4/5.
D)0.90 or 9/10.
E)0.60 or 3/5.

Question

The table given below shows the values of different components of aggregate expenditure of an economy.The marginal propensity to consume (MPC)equals:​ ​
Table 9.2
​

A)0.20 or 1/5. 
B)0.40 or 2/5. 
C)0.80 or 4/5. 
D)0.90 or 9/10. 
E)0.60 or 3/5.

Quizplus · Accepted Answer

To find the MPC, we need to look at the change in consumption (C) divided by the change in income (Y). As we move from E to F, C increases by 500 and Y increases by 625, so MPC = 500/625 = 0.8 or 4/5.

The Table Given Below Shows the Values of Different Components