A worker gets a raise of $120 per month and quickly decides to spend $90 of the money on necessities and the occasional luxury, while putting the remaining $30 into retirement savings. Based on this decision, calculate the worker's marginal propensity to consume, or MPC, as a decimal. Type an answer and press enter to submit

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Business

Bolton

19 September, 15:43

A worker gets a raise of $120 per month and quickly decides to spend $90 of the money on necessities and the occasional luxury, while putting the remaining $30 into retirement savings. Based on this decision, calculate the worker's marginal propensity to consume, or MPC, as a decimal. Type an answer and press enter to submit

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Evangeline Castaneda · Answer 1

The marginal propensity to consume (MPC) is 0,75.

Explanation:

This value is gotten by dividing the $90 of consumption by total raise ($120). MPC is a ratio that calculates the tendency of people to consume per every unit of money (in this case, dollars). In aggregate levels, it is important to understand the effects of investment and consumption in the whole economy