If your disposable personal income increases from $33,000 to $41,000 and your consumption increases from $8,000 to $12,000, your marginal propensity to consume (MPC)is:
A)0.2.
B)0.4.
C)0.5.
D)0.8.
E)1.0.

Question

Quizplus · Accepted Answer

MPC = (Change in consumption) / (Change in disposable personal income) = ($12,000 - $8,000) / ($41,000 - $33,000) = $4,000 / $8,000 = 0.5

If Your Disposable Personal Income Increases from $33,000 to $41,000