Franco the economist uses data for Canada to estimate a Keynesian consumption function: C^d = 0.46 + 0.92Y
In this equation, what is the marginal propensity to consume?

Question

Franco the economist uses data for Canada to estimate a Keynesian consumption function: C^d = 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

Quizplus · Accepted Answer

The coefficient in front of the income variable (Y) represents the marginal propensity to consume. In this case, the coefficient is 0.92, so the answer is C.

Franco the Economist Uses Data for Canada to Estimate a Keynesian