Consider the following information for a family. The income for the family is $58,000; if the MPC is 0.6, and income increases by $13,000, then the increase in savings for the family is:
A) $5,400.
B) $5,200.
C) $420.
D) $7,800.

Question

Quizplus · Accepted Answer

Given, income for the family is $58,000 and MPC = 0.6

MPC = Change in consumption / Change in income
0.6 = Change in consumption / $13,000
Change in consumption = $7,800

Increase in savings = Change in income - Change in consumption
= $13,000 - $7,800
= $5,200

Therefore, the answer is B, $5,200.

Consider the Following Information for a Family