In the equation PAE = A + bY, the MPC is captured by:
A) b.
B) Y.
C) A.
D) PAE.

Name: In the equation PAE = A + bY, the MPC is captured by: A) b. B) Y. C) A. D) PAE.
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Question

Quizplus · Accepted Answer

The MPC, or marginal propensity to consume, is represented by the coefficient of Y in the equation, which is b. This coefficient measures the change in PAE (planned aggregate expenditure) for a one-unit change in income (Y), directly capturing the concept of MPC.

In the Equation PAE = a + BY, the MPC