If consumption spending increases from $758 to $767 billion when disposable income increases from $912 to $927 billion, it can be concluded that the marginal propensity to consume is

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Business

Amiah Alvarado

1 June, 10:11

If consumption spending increases from $758 to $767 billion when disposable income increases from $912 to $927 billion, it can be concluded that the marginal propensity to consume is

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Osvaldo Valencia · Answer 1

In economics, the marginal propensity to consume, or abbreviated as MPC, is the ratio of the change of consumption to the change of income. In other words, the MPC is the slope of a consumption vs. income plot graph. Analytically, its equation is

MPC = ΔC/ΔI

MPC = ($767-$758) / ($927-$912)

MPC = 0.6 or 60%