If autonomous consumption rises by $70 and, as a result, Real GDP rises by $350, then the marginal propensity to consume is
A. 0.20.
B. 0.80.
C. 0.25.
D. 0.75.
E. none of the above
Ans:
Marginal propensity to consume = 0.20
Analysis
Marginal propensity to consume = change in consumption / change in income
= $70 / $350
= 0.2 or 20%
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