Answer to Question #207123 in Macroeconomics for Meme

Question

Given:  C = 100 + 0.75Yd;  I = 120 - 0.1Y – 200i; G= 40; T = 40 

What is the marginal propensity to consume?

Answer 1

To get the MPC:

Given consumption function:

$C = 100 + 0.75Yd,$ which is of the form $C = c+ bY.$

Here, b indicates the value of MPC, which would be 0.75. Therefore, marginal propensity to consume is 0.75.