If we consider the equation PAE = A + bY the part that corresponds to the MPC when we make simplifying assumptions is:
A) b
B) Y
C) A
D) PAE

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption expenditure divided by the change in disposable income. In the equation PAE = A + bY, b represents the change in consumption expenditure divided by the change in disposable income, so b is the MPC.

If We Consider the Equation PAE = a + BY the Part