Table 9.1 $$\begin{array} { | l | c | }
\hline \begin{array} { c }
\text { Disposable Income } \
\text { (Billions of dollars per year) }
\end{array} & \begin{array} { c }
\text { Total Consumption } \
\text { (Billions of dollars per year) }
\end{array} \
\hline \text { \$0 } & \$ 50 \
\hline 200 & 210 \
\hline
\end{array}$$ What is the marginal propensity to consume in Table 9.1?
A)0.15.
B)0.80.
C)0.85.
D)0.90.

Question

Table 9.1 $$\begin{array} { | l | c | } 
\hline \begin{array} { c } 
\text { Disposable Income } \
\text { (Billions of dollars per year) }
\end{array} & \begin{array} { c } 
\text { Total Consumption } \
\text { (Billions of dollars per year) }
\end{array} \
\hline \text { \$0 } & \$ 50 \
\hline 200 & 210 \
\hline
\end{array}$$ What is the marginal propensity to consume in Table 9.1?
A)0.15.
B)0.80.
C)0.85.
D)0.90.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in disposable income. Here, the change in consumption is $210 - 50 = 160$, and the change in disposable income is $200 - 0 = 200$. Thus, MPC = 160/200 = 0.80.

Table 91 What Is the Marginal Propensity to Consume in Table 9