Your friend just got an unexpected $1,000 tax refund. She plans to put $800 towards paying off credit card debt, $100 toward her

Question

2 years ago

9

student loans, and use the remaining $100 to purchase a new grill for her deck. What's your friend's marginal propensity to consume (MPC)

1 answer:

Lubov Fominskaja [6] · Answer 1 · 2023-03-31T18:18:22+03:00

Based on the expenses that she spent on and the amount received, your friends Marginal Propensity to Consume is 0.1 or 10%.

Marginal propensity to consume can be found by the formula:
= Increase in consumption / Increase in income

The only consumption will be the $100 spent on the new grill.

MPC is:

= 100 / 1,000

= 10%

Find out more on Marginal Propensity to Consume at brainly.com/question/17930875.