If disposable income increases from $912 to $927 billion and MPC = 0.6, then consumption will increase by
A) $6 billion.
B) $9 billion.
C) $54 billion.
D) $56 billion.

Question

Quizplus · Accepted Answer

First, we need to calculate the change in disposable income:

$927 billion - $912 billion = $15 billion

Then, we can use the formula for calculating the change in consumption:

ΔC = MPC x ΔY

ΔC = 0.6 x $15 billion = $9 billion

Therefore, consumption will increase by $9 billion.

If Disposable Income Increases from $912 to $927 Billion and MPC