Equations for C, I, G, and NX are given below.If the equilibrium level of GDP is $32,000, what is the marginal propensity to consume? C = 5,000 + (MPC)Y
I = 1,500
G = 2,000
NX = -500
A)0.6
B)0.67
C)0.75
D)0.8
E)0.9

Question

Quizplus · Accepted Answer

To find the marginal propensity to consume (MPC), use the equilibrium GDP equation: Y = C + I + G + NX. Plug in the values: 32,000 = 5,000 + MPC(32,000) + 1,500 + 2,000 - 500. Solving for MPC gives MPC = 0.75.

Equations for C, I, G, and NX Are Given Below