Exhibit 8-1 Disposable income and consumption data
Disposable Income(Y)
Consumption(C)
0
500
1,000
1,400
2,000
2,200
3,000
2,900
4,000
3,500
5,000
4,000
In Exhibit 8-1, when disposable income (Y) is increased from $1,000 to $2,000, the marginal propensity to consume is:
A. 0.2.
B. 0.6.
C. 0.8.
D. 1.0.
Answer: C
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