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Suppose That When Disposable Income Increases by $2,000, Consumption Spending

Question 249

Multiple Choice

Suppose that when disposable income increases by $2,000, consumption spending increases by $1,500. Given this information, we know that the marginal propensity to consume (MPC) is


A) .25.
B) .75.
C) $1,000/$750 = 1.33.
D) 1/.25 = 4.

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