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Answer to Question #74626 in Macroeconomics for Nicole Kimbrough

Question #74626
If the discretionary income in a nation rises from $13 trillion to $15 trillion and consumption spending increases from $12 trillion to 13.5 trillion what is the marginal propensity to consume?
Expert's answer
marginal propensity to consume = (consumption spending2 - consumption spending1)/( income2 – income1) = ($13.5 - $12) / ($15-$13) = 0.75

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