If consumption is defined as C = 1,350 + 0.6Y,then the value of the marginal propensity to consume is 0.6.

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Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is defined as the fraction of a change in income that is spent on consumption. In this case, the consumption function is given as C = 1,350 + 0.6Y, where Y is income. The coefficient of Y (0.6) represents the marginal propensity to consume. Therefore, the value of the MPC is 0.6, making option A true.

If Consumption Is Defined as C = 1,350 + 0