Exhibit 10-2

-The marginal propensity to consume (MPC) in Exhibit 10-2 equals
A)0.20 or 1/5
B)0.40 or 2/5
C)0.80 or 4/5
D)0.90 or 9/10
E)0.60 or 3/5

Question

Exhibit 10-2
 
-The marginal propensity to consume (MPC) in Exhibit 10-2 equals
A)0.20 or 1/5 
B)0.40 or 2/5 
C)0.80 or 4/5 
D)0.90 or 9/10 
E)0.60 or 3/5

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of additional income that is spent on consumption. Without Exhibit 10-2, we assume the most common MPC value in economic models, which is 0.80 or 4/5.

Exhibit 10-2 -The Marginal Propensity to Consume (MPC) in Exhibit 10-2 Equals