I will spend $120 on consumption if marginal propensity to consume is 0. 4 and i get an additional $300 in income.
What is marginal propensity to consume(MPC)?
Marginal propensity to consume (MPC) is the portion of an income that a person spends instead of saving the income.
The marginal propensity to consume(MPC) is computed as
= Change in consumption / Change in income.
However, the consumption would be
= Change in income * marginal propensity to consume(MPC)
= 0.4 x 300
= $120
Hence, I will spend $120 on consumption if marginal propensity to consume is 0. 4 and i get an additional $300 in income.
Learn more about marginal propensity to consume(MPC) here : https://brainly.com/question/6450400
