-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The marginal propensity to consume in Syldavia is equal to
A) 0.80.
B) 0.20.
C) 5.00.
D) 0.75.
E) 0.40.

Question

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The marginal propensity to consume in Syldavia is equal to
A) 0.80. 
B) 0.20. 
C) 5.00. 
D) 0.75. 
E) 0.40.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of additional income that is spent on consumption. If there are no income taxes or imports, the MPC can be calculated by dividing the change in consumption by the change in income. An MPC of 0.80 means that for every additional dollar of income, 80 cents are spent on consumption.

-The Above Table Contains Information About the Nation of Syldavia