Here is a consumption function: C = C₀ + MPC(Y_d).If MPC is 0.91,then we know that A) as Y_d rises by $1,Co rises by $0.91. B) as Y_d rises by $1,C rises by $0.91. C) Y_d rises by $0.91. D) as C₀ rises by $0.09,Y_d rises by $1.

Question

Quizplus · Accepted Answer

The MPC represents the change in consumption (C) corresponding to a change in income (Y_d). Specifically, for every $1 increase in income, consumption will increase by $0.91 according to the given consumption function. Therefore, as Y_d rises by $1, C will rise by $0.91.

Here Is a Consumption Function: C = C0 + MPC(Yd)

Here Is a Consumption Function: C = C₀ + MPC(Y_d)