The following partial data relates to a national economy (all figures in $billions):

-Refer to the above table to answer this question.What is the value of the marginal propensity to expend?
A)0
B)0.4
C)0.6
D)1.67
E)2.5

Question

The following partial data relates to a national economy (all figures in $billions):
 
-Refer to the above table to answer this question.What is the value of the marginal propensity to expend?
A)0 
B)0.4 
C)0.6 
D)1.67 
E)2.5

Quizplus · Accepted Answer

The marginal propensity to expend (MPE) is the ratio of the change in aggregate expenditure to the change in income. In this case, when income increases by $100 billion, aggregate expenditure increases by $60 billion, making the MPE equal to 0.6 (60/100). Therefore, the answer is C.

The Following Partial Data Relates to a National Economy (All