Use the figure below to answer the following questions.
Figure 11.2.3
There are no taxes in this economy.
-In Figure 11.2.3, the marginal propensity to consume, assuming no income taxes, is
A)1.0.
B)0.3.
C)0.9.
D)0.6.
E)0.93.

Question

Use the figure below to answer the following questions.
  Figure 11.2.3
There are no taxes in this economy.
-In Figure 11.2.3, the marginal propensity to consume, assuming no income taxes, is
A)1.0. 
B)0.3. 
C)0.9. 
D)0.6. 
E)0.93.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of an additional dollar of disposable income that is spent on consumption. An MPC of 0.9 means that for every additional dollar of income, 90 cents is spent on consumption. This is a common value used in economic models to represent a high propensity to consume.

Use the Figure Below to Answer the Following Questions