Answer to Question #253435 in Macroeconomics for trexie

Question

If your consumption increases from $60,000/yr to $70,000/yr when your disposable income increases from $85,000 to $98,500/yr, calculate your MPC. *

Answer 1

$MPC=\frac{Change in Consumer Spending}{Change in Income}$

$=\frac{70,000-60,000}{98,500-85,000}$

$=\frac{10,000}{13,500}$

$=0.74$