Given the equations for C,I,G,and NX below,what is the value of the marginal propensity to consume? C = 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400
A)-0.1
B)0.1
C)0.9
D)2000

Question

Quizplus · Accepted Answer

The marginal propensity to consume represents the change in consumption for every $1 change in income. It is the coefficient on Y in the consumption function. In this case, the coefficient is 0.9, so for every $1 increase in income, consumption will increase by $0.90. Therefore, the answer is C) 0.9.

Given the Equations for C,I,G,and NX Below,what Is the Value