### Marginal Propensity to Consume (MPC) Calculation#### Instructions:Use the figure to calculate the marginal propensity to consume (MPC) between point A and point B.MPC = [ ] (Enter your response as a real number rounded to two decimal places.)#### Graph Explanation:The provided graph illustrates the relationship between real national income or real GDP (measured in billions of dollars) on the horizontal axis and real consumption spending (measured in billions of dollars) on the vertical axis. There are three specific points identified on the graph:1. Point A corresponds to a real national income of $3,000 billion and real consumption spending of $2,250 billion.2. Point B corresponds to a real national income of $5,000 billion and real consumption spending of $3,750 billion.3. Point C is not required for the calculation but is shown for context.To calculate the MPC between points A and B:1. **Calculate the change in consumption spending (ΔC):** \[ \Delta C = C_B - C_A = 3750 \text{ billion dollars} - 2250 \text{ billion dollars} \] \[ \Delta C = 1500 \text{ billion dollars} \]2. **Calculate the change in national income (ΔY):** \[ \Delta Y = Y_B - Y_A = 5000 \text{ billion dollars} - 3000 \text{ billion dollars} \] \[ \Delta Y = 2000 \text{ billion dollars} \]3. **Compute the MPC:** \[ MPC = \frac{\Delta C}{ΔY} = \frac{1500}{2000} = 0.75 \]Enter your final answer as:MPC = 0.75

The marginal propensity to consume (MPC) is an economic concept that measures the change in consumer…

Use the figure to calculate the marginal propensity to consume (MPC) between point A and point B. MPC = (Enter your response as a real number rounded to two decimal places.) Real consumption spending ($ billions) Consumption and National Income $3.750 ********* $2,250 A B $3,000 $5,000 Real national income or real GDP ($ billions)

Use the figure to calculate the marginal propensity to consume (MPC) between point A and point B. MPC = (Enter your response as a real number rounded to two decimal places.) Real consumption spending ($ billions) Consumption and National Income $3.750 ********* $2,250 A B $3,000 $5,000 Real national income or real GDP ($ billions)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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