$$\begin{array}{l}
\text { Disposable Income Consumption }\
\begin{array} { c c }
0 & \$ 1 \text { trillion } \
\$ 1 \text { trillion } & 1.5 \text { trillion } \
2 \text { trillion } & 2.0 \text { trillion } \
3 \text { trillion } & 2.5 \text { trillion } \
4 \text { trillion } & 3.0 \text { trillion }
\end{array}
\end{array}$$
-How much is the marginal propensity to consume when disposable income rises from 0 to $1 trillion?

Question

$$\begin{array}{l}
\text { Disposable Income Consumption }\
\begin{array} { c c } 
0 & \$ 1 \text { trillion } \
\$ 1 \text { trillion } & 1.5 \text { trillion } \
2 \text { trillion } & 2.0 \text { trillion } \
3 \text { trillion } & 2.5 \text { trillion } \
4 \text { trillion } & 3.0 \text { trillion }
\end{array}
\end{array}$$
-How much is the marginal propensity to consume when disposable income rises from 0 to $1 trillion?

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in disposable income. From 0 to $1 trillion, consumption increases from $1 trillion to $1.5 trillion, a change of $0.5 trillion. Disposable income increases by $1 trillion. Thus, MPC = $0.5 trillion / $1 trillion = 0.5.

-How Much Is the Marginal Propensity to Consume When Disposable