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riadik2000 [5.3K]
3 years ago
10

Suppose that when disposable income decreases by $2,000, consumption spending increases by $1500. Given this information, we kno

w that the marginal propensity to consume (MPC) is
Business
1 answer:
sdas [7]3 years ago
4 0

Answer:

the marginal propensity to consume is 0.75

Explanation:

The computation of the marginal propensity to consume is shown below:

MPC = Change in consumption ÷Change in disposable income

where,

The Change  in consumption is 1500

ANd, the Change in disposable income is 2000

So,

MPC is

= $1,500 ÷ $2,000

= 0.75

hence, the marginal propensity to consume is 0.75

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