4. If equilibrium output rises by a total of $400 billion in response to an increase in government spending of $80 billion, what
1 answer:
Answer:
The marginal propensity to consume is 0.2
Explanation:
As we know
Marginal propensity to consume (MPC) is equal to change in consumer spending divided by change in disposable income
Substituting the given values, we get -
Marginal propensity to consume (MPC)
The marginal propensity to consume is 0.2
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