Table 9.2

-Refer to Table 9.2, which shows the values of different components of aggregate expenditure of an economy. The marginal propensity to consume (MPC) equals _____
A) 0.20 or 1/5.
B) 0.40 or 2/5.
C) 0.80 or 4/5.
D) 0.90 or 9/10.
E) 0.60 or 3/5.

Question

Table 9.2
 
-Refer to Table 9.2, which shows the values of different components of aggregate expenditure of an economy. The marginal propensity to consume (MPC) equals _____
A) 0.20 or 1/5. 
B) 0.40 or 2/5. 
C) 0.80 or 4/5. 
D) 0.90 or 9/10. 
E) 0.60 or 3/5.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in income. Without the specific values from Table 9.2, the correct answer cannot be determined from the provided information. However, based on common economic principles, an MPC of 0.80 or 4/5 is a typical value, indicating that for every additional dollar of income, consumption increases by 80 cents.

Table 9.2 -Refer to Table 9.2, Which Shows the Values of Different