If income increases by $100 and the MPC is 3/4 (0.75),then consumption increases by
A)$25
B)$66.66
C)$50
D)$33.33
E)$75

Name: If income increases by $100 and the MPC is 3/4 (0.75),then consumption increases by A)$25 B)$66.66 C)$50 D)$33.33 E)$75
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Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is 0.75, meaning that for every additional dollar of income, consumption increases by 75 cents. Therefore, if income increases by $100, consumption increases by 0.75 * $100 = $75.

If Income Increases by $100 and the MPC Is 3/4