Franco the economist uses data for Canada to estimate a Keynesian consumption function:
Cᵈ₌ ₀.₄₆ ₊ ₀.₉₂Y
In this equation,what is the marginal propensity to consume?
A)0.46
B)0.50
C)0.92
D)1.38

Question

Quizplus · Accepted Answer

The coefficient (multiplier) of Y in the consumption function represents the marginal propensity to consume. Therefore, in this equation, the marginal propensity to consume is 0.92.

Franco the Economist Uses Data for Canada to Estimate a Keynesian