**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 = $360The correct choice is 840; 360.

Marginal propensity to consume shows the how much of income will be devoted to consumption. MPS = 1 - MPC MPS = Marginal propensity to save MPC = Marginal propensity to consume We have , Income = $1200 MPC = 0.70 So, MPS = 1 - 0.70 => MPS = 0.30 So, Rise in consumption = 0.70 × $1200 = $840 Rise in saving = 0.30 × $1200 = $360 Hence, The correct option is (d). 840 ; 360

Answered: If Jonathan received an $1200 bonus and…

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Economics

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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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