If the MPC is 0.60 and disposable income increases from $20,000 billion to $22,000 billion, consumption will increase by 1,200 billion.
First, find the change in disposable income:
22,000 billion minus 20,000 billion = 2,000 billion
multiply by MPC to find consumption increase:
2,000 billion x .60 = 1,200 billion
What does MPC mean?
The marginal propensity to consume (MPC) concept quantifies how much more people will spend for every dollar of new income. The marginal consumption to marginal income ratio, or MPC, is determined.
What is the uses of MPC?
MPC uses a dynamic representation of the process to forecast the controlled variable. The anticipated controlled variable is supplied back to the controller, where it is employed in an online optimization process to decide the manipulated variable by minimizing an appropriate cost function.
Learn more about MPC: brainly.com/question/13762296
#SPJ4
