If your marginal propensity to consume is 0.75 and you get an additional $400 in income,you would spend ________ on consumption.
A) $400.00
B) $200.00
C) $533.33
D) $300.00
E) $1,600.00

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) of 0.75 means that for every additional dollar of income, you spend 75 cents. Therefore, if you receive an additional $400, you would spend 0.75 * $400 = $300 on consumption.

If Your Marginal Propensity to Consume Is 0