Question

What is your marginal rate of consumption (MPC)? If your income increased $1,000 per month until retirement, how much would your spending on consumption goods increase?

Answer 1

$400

Step-by-step explanation:

In the case when the income would be increased by $1,000 per month so the spending on consumption goods would also be increased by 40% here we assume the 40%

So,

= $1,000 × 40%

= $400

Therefore based on the above assumption, the spending on consumption goods would be increased by $400