What is your permanent income marginal propensity to consume (MPC) if your income permanently changes by $20,000 and your consumption increases by $15,000?
A)0.75
B)0.25
C)0.2
D)1.33

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated by dividing the change in consumption by the change in income. Here, MPC = $15,000 / $20,000 = 0.75.

What Is Your Permanent Income Marginal Propensity to Consume (MPC)