If autonomous consumption is $200, disposable income is $1000 and the marginal propensity to consume is 0.9, then consumption is
A) $900.
B) $1,000.
C) $1100.
D) $1,200.

Question

Quizplus · Accepted Answer

Consumption is calculated as autonomous consumption plus the product of the marginal propensity to consume (MPC) and disposable income. Here, it's $200 + 0.9 * $1000 = $200 + $900 = $1100.

If Autonomous Consumption Is $200, Disposable Income Is $1000 and the Marginal