Assume that in a particular economy the MPC = 0.64 and the MPM = 0.14.
-Refer to the above graph to answer this question.What is the value of the MPE in this economy?
A)0.25.
B)0.33.
C)0.5.
D)0.67.
E)1.

Question

Quizplus · Accepted Answer

The formula for the marginal propensity to consume (MPC) plus the marginal propensity to import (MPM) equals the marginal propensity to expend (MPE).

MPC + MPM = MPE

Substituting the values given, we get:

0.64 + 0.14 = 0.78

Therefore, the value of MPE in this economy is 0.78. 
The closest answer choice is B, which is 0.33. However, this is not the correct answer.

Assume That in a Particular Economy the MPC = 0