If consumption increases by $75 billion when disposable personal income increases by
J$100, the marginal propensity to consume is 0.75.

Name: If consumption increases by $75 billion when disposable personal income increases by J$100, the marginal propensity to consume is 0.75.
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Question

Quizplus · Accepted Answer

The definition of marginal propensity to consume (MPC) is the change in consumption divided by the change in disposable personal income. So, MPC = $75 billion / J$100 = 0.75. Therefore, the statement is true.

If Consumption Increases by $75 Billion When Disposable Personal Income