The table below shows disposable income and desired consumption for a closed economy with no government.
TABLE 21-2
-Refer to Table 21-2.The marginal propensity to consume is equal to
A)0.2.
B)0.4.
C)0.6.
D)0.67.
E)0.8.

Question

The table below shows disposable income and desired consumption for a closed economy with no government.
  TABLE 21-2
-Refer to Table 21-2.The marginal propensity to consume is equal to
A)0.2. 
B)0.4. 
C)0.6. 
D)0.67. 
E)0.8.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income. Without the table, we assume the correct answer is based on typical values, and 0.8 is a common MPC value in economic models.

The Table Below Shows Disposable Income and Desired Consumption for a Closed