Question

Assume that the full-employment level of output is $2,000 and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $1,900 and, at the price level of 100, current aggregate demand is $1,850. If the government moves the economy back to the full-employment level of output by increasing government purchases by $30, then the MPC equals
a. 0.8.
b. 0.75.
c. 0.6.
d. 0.5.

Answer 1

Answer:

a. 0.8

Explanation:

In economics the MPC is the marginal propensity to consume. This percentage is usually multiplied by the disposable income to figure out how much money people in an economy will spend.