Questions: Exhibit 18-9 Consumption function
In Exhibit 18-9, the value of the marginal propensity to consume is:
0.75 .
0.80
0.50
0.25
0.20
Transcript text: Exhibit 18-9 Consumption function
In Exhibit 18-9, the value of the marginal propensity to consume is:
0.75 .
0.80
0.50
0.25
0.20
Solution
The answer is 0.75.
The marginal propensity to consume (MPC) is the change in consumption resulting from a change in income. In this case, the value of the MPC is given as 0.75 in Exhibit 18-9. This means that for every additional unit of income, 75% of it will be consumed.