Homework Answers
Marginal Propensity to Consume
= Change in Consumption / Change in Income
0.5 = 10 / Change in Income
Change in Income = 20.
Option B is correct ie increased by 20 billion.
The formula for marginal propensity to consume (MPC) refers to the increase in consumer spending owing to the increase in disposable income. The MPC formula is derived by dividing the change in consumer spending (ΔC) by the change in disposable income (ΔI).
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