In an economy with no taxes and no imports, when disposable income increases from $2000 to $3000, consumption increases from $1500 to $2100. given this information, the marginal propensity to consume is

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Damon Jordan

13 April, 19:15

In an economy with no taxes and no imports, when disposable income increases from $2000 to $3000, consumption increases from $1500 to $2100. given this information, the marginal propensity to consume is

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Francisco Blanchard · Answer 1

In an economy with no taxes and no imports, when disposable income increases from $2000 to $3000, consumption increases from $1500 to $2100. given this information, the marginal propensity to consume is 0.6 Disposable in come = 3000-2000=$1000. consumption = 2100-1500=$600. marginal propensity=$600/$1000=0.6