Use Table 10.3,which shows the relationship between consumption and income.Assume the price level is constant. $\begin{array}{ll}
\text { Disposal Income } & \text { Total Consumption }& \text { Investment }& \text { Total Expenditure }\
\text { (Billions per Year) }& \text { (Billions per Year) }& \text {(Billions per Year) }& \text { (Billions per Year)}\\hline
\$ 0 & \$ 200 & \$ 100 &\_\_\_\
200 & 300 & 100&\_\_\_ \
400 & 400 & 100&\_\_\_ \
600 & 500 & 100&\_\_\_
\end{array}$

$\text { Table } 10.3$ What is the marginal propensity to consume in Table 10.3?
A)0.50.
B)0.667.
C)0.85.
D)0.75.

Question

Use Table 10.3,which shows the relationship between consumption and income.Assume the price level is constant. $\begin{array}{ll}
\text { Disposal Income } & \text { Total Consumption }& \text { Investment }& \text { Total Expenditure }\
\text { (Billions per Year) }& \text { (Billions per Year)  }& \text {(Billions per Year) }& \text { (Billions per Year)}\\hline
\$ 0 & \$ 200 & \$ 100 &\_\_\_\
200 & 300 & 100&\_\_\_ \
400 & 400 & 100&\_\_\_ \
600 & 500 & 100&\_\_\_
\end{array}$

$\text { Table } 10.3$ What is the marginal propensity to consume in Table 10.3?
A)0.50.
B)0.667.
C)0.85.
D)0.75.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated by the change in consumption divided by the change in income. From the table, when income increases from $200 to $400, consumption increases from $300 to $400. Thus, MPC = (400-300)/(400-200) = 100/200 = 0.50.

Use Table 10 Table 10.3\text { Table } 10.3 Table 10.3 What Is the Marginal Propensity to Consume in Table 10

Use Table 10 $\text { Table } 10.3$ What Is the Marginal Propensity to Consume in Table 10