When disposable income risesfrom Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equal to

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Quizplus · Accepted Answer

The Marginal Propensity to Consume (MPC) is calculated as the change in consumption expenditure divided by the change in disposable income. Here, the change in consumption expenditure is Rs 560 - Rs 470 = Rs 90, and the change in disposable income is Rs 600 - Rs 500 = Rs 100. Therefore, MPC = 90/100 = 0.9.

When Disposable Income Risesfrom Rs 500 to Rs 600 and Consumption