If Jonathan received an $1200 bonus and his MPC is 0.70, his consumption rises by $ and his saving rises by $_ 800, 400 825; 375 725; 475 840; 360
If Jonathan received an $1200 bonus and his MPC is 0.70, his consumption rises by $ and his saving rises by $_ 800, 400 825; 375 725; 475 840; 360
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:**Question 27:**
If Jonathan received a $1200 bonus and his MPC (Marginal Propensity to Consume) is 0.70, his consumption rises by $_______ and his saving rises by $_______.
- ○ 800, 400
- ○ 825, 375
- ○ 725, 475
- ○ 840, 360
**Explanation:**
This multiple-choice question explores the relationship between the Marginal Propensity to Consume (MPC) and changes in consumption and savings due to a change in income. The MPC is 0.70, which means Jonathan spends 70% of any additional income received; the remaining 30% is saved.
Given a $1200 bonus:
- Consumption = 0.70 x $1200 = $840
- Savings = 0.30 x $1200 = $360
The correct choice is 840; 360.
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