Question

Suppose two successive levels of disposable personal income are $16 and $21 billion, respectively, and the change in consumption spending between these two levels of disposable personal income is $2 billion, then the MPC will be equal to _____.

Answer 1

The correct answer is 0.4

Step-by-step explanation:

Marginal Propensity to consume

21 Billions- 16 Billions = 5 Billions

2 Billion ÷ 5 Billions = 0.4

The MPC will be equal to 0.4