(Advanced analysis)Answer the question on the basis of the following consumption schedule: C = 20 + .9Y,where C is consumption and Y is disposable income. Refer to the given data.The MPC is:
A) .45.
B) .20.
C) .50.
D) .90.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income. In the consumption function C = 20 + 0.9Y, the coefficient of Y (0.9) represents the MPC.

(Advanced Analysis)Answer the Question on the Basis of the Following