If the consumption function is defined as C = 5,500 + 0.9Y, what is the marginal propensity to consume?
A)0.1
B)0.9
C)5.5
D)6.1
E)$5,500

Name: If the consumption function is defined as C = 5,500 + 0.9Y, what is the marginal propensity to consume? A)0.1 B)0.9 C)5.5 D)6.1 E)$5,500
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Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in disposable income. In this case, the MPC is equal to 0.9.

If the Consumption Function Is Defined as C = 5,500