If consumer income increases by $100 million in the united states and the mpc is. 6, by how much will consumption increase?

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Business

Zain Cannon

9 December, 11:52

If consumer income increases by $100 million in the united states and the mpc is. 6, by how much will consumption increase?

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Octavio Kaiser · Answer 1

The marginal propensity to consume (MPC) is a measure of the proportion of extra income that will be spent on consumption. If an individual receives an extra $100 and spends $60 on consumption then the personâ€™s MPC is 0.60. If consumer income in the United States increases by $100 million and the MPC is 0.60 consumption in the US will increase by $60 million.