Refer to the information provided in Table 8.4 below to answer the questions that follow.
Table 8.4
-Refer to Table 8.4. Assuming society's MPC is constant, at an aggregate income level of $1,200, aggregate consumption would be
A) $2,000.
B) $1,400.
C) $1,100.
D) $950.

Question

Refer to the information provided in Table 8.4 below to answer the questions that follow.
Table 8.4 
-Refer to Table 8.4. Assuming society's MPC is constant, at an aggregate income level of $1,200, aggregate consumption would be
A) $2,000. 
B) $1,400. 
C) $1,100. 
D) $950.

Quizplus · Accepted Answer

According to Table 8.4, at an aggregate income level of $1,200, the corresponding consumption expenditure is $1,100. This is calculated by multiplying the given MPC (0.9) with the given aggregate income level ($1,200) i.e. 0.9 x $1,200 = $1,080. This is the amount that households plan to consume at this income level. However, there is also autonomous consumption expenditure of $20 that households will undertake regardless of their income level. Hence, the total aggregate consumption at an income level of $1,200 would be $1,100 ($1,080 + $20).

Refer to the Information Provided in Table 8