Question

In the term project, the estimate for the marginal propenstiy to consume is

-1

-0.79

- -67.58

-none of the above

Answer 1

If we talk in simple terms then marginal propensity to consume is defined as the proportion of the total aggregate value in which the consumer spends on the consumption as opposed to saving

• its value lies between 0 to 1
• it is expressed on consumption function equation
• in this function marginal propensity to consume re-presents the slope of the consumption function
• in terms of formula it is given by the ratio of change in consumption with the change in disposable income
• disposable income is the income that is left by paying all the taxes
• if we talk about for a project maximum value then the maximum value of marginal propensity to consume that is one will not be possible
• so the only correct answer here is .79
• answer here is option B