The Marginal propensity to consume is 0.5
Consumption function: C = a + MPC * Yd
Where 'a' is the autonomous consumption (i.e., consumption at zero level of income)
MPC is the marginal propensity to consume.
Yd is the disposable income.
=> Yd = Y - T
So, C = 200 + MPC*Yd
=> C = 200 + MPC *(Y - T)
------------------------------------
AE = C + I + G + NX
=> AE = 200 + MPC *(Y - T) + 20 + 100 + 0
=> AE = 320 + MPC* (Y-50)
At Y = 610, AE is 600
=> 600 = 320 + MPC *(610 - 50)
=> 600 -320 = MPC * (560)
=> 280 = MPC * (560)
=> MPC = (280 / 560)
=> MPC = 0.5
Marginal propensity to consume measures how much consumers will spend or save against an overall increase in wages. In other words, if a person received an increase in income, what percentage of that new income would he spend.
Learn more about Marginal propensity here: brainly.com/question/17930875
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