If your MPC is 0.5, then when your disposable income increases by $100, your consumption expenditure increases by
A) $5.
B) $200.
C) $100.
D) $50.
E) $95.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) of 0.5 means that for every additional dollar of disposable income, consumption increases by 50 cents. Therefore, if disposable income increases by $100, consumption increases by $50 (0.5 * $100 = $50).

If Your MPC Is 0