$$\begin{array} { c c c }
\hline \begin{array} { c }
\text { Real } \
\text { GDP } \
( \$ )
\end{array} & \begin{array} { c }
\text { Consumption } \
( \$ )
\end{array} & \begin{array} { c }
\text { Planned } \
\text { investment } \
( \$ )
\end{array} \
\hline 0 & 140 & 100 \
100 & 220 & 100 \
200 & 300 & 100 \
300 & 380 & 100 \
400 & 460 & 100 \
500 & 540 & 100 \
600 & 620 & 100 \
700 & 700 & 100 \
800 & 780 & 100 \
900 & 860 & 100 \
1,000 & 940 & 100 \
1,100 & 1,020 & 100 \
1,200 & 1,100 & 100 \
1,300 & 1,180 & 100 \
\hline
\end{array}$$
-Refer to the table in the exhibit.What is the MPC in the economy represented?
A) 0
B) 0.2
C) 0.8
D) 0.9

Question

$$\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Real } \
\text { GDP } \
( \$ )
\end{array} & \begin{array} { c } 
\text { Consumption } \
( \$ )
\end{array} & \begin{array} { c } 
\text { Planned } \
\text { investment } \
( \$ )
\end{array} \
\hline 0 & 140 & 100 \
100 & 220 & 100 \
200 & 300 & 100 \
300 & 380 & 100 \
400 & 460 & 100 \
500 & 540 & 100 \
600 & 620 & 100 \
700 & 700 & 100 \
800 & 780 & 100 \
900 & 860 & 100 \
1,000 & 940 & 100 \
1,100 & 1,020 & 100 \
1,200 & 1,100 & 100 \
1,300 & 1,180 & 100 \
\hline
\end{array}$$
-Refer to the table in the exhibit.What is the MPC in the economy represented?  
A) 0 
B) 0.2 
C) 0.8 
D) 0.9

Quizplus · Accepted Answer

The Marginal Propensity to Consume (MPC) is calculated as the change in consumption divided by the change in real GDP. From the table, when GDP increases from 100 to 200, consumption increases from 220 to 300. Thus, MPC = (300-220)/(200-100) = 80/100 = 0.8.

-Refer to the Table in the Exhibit