If your MPC is 0.5 then,when your disposable income increases by $100,your consumption expenditure increases by
A)$100.
B)$200.
C)$5.
D)$50.
E)$95.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) of 0.5 means that for every additional dollar of disposable income, consumption increases by 50 cents. Therefore, if disposable income increases by $100, consumption expenditure increases by $50 (0.5 * $100 = $50).

If Your MPC Is 0