Suppose the Value of the Marginal Propensity to Consume (MPC)

question 62

Multiple Choice

Suppose the value of the marginal propensity to consume (MPC) in a closed economy is 0.75, autonomous consumption is £300 and national output is 1500. If the tax rate is 8%, what is the level of consumption in the economy?

• A) £1035
• B) £1335
• C) £1380
• D) £465

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Definitions:

Hypothalamus

A region of the brain that controls an enormous number of bodily functions including emotions, the autonomic nervous system, and the endocrine system.

Autonomic Nervous System

The part of the nervous system responsible for control of the bodily functions not consciously directed, such as breathing, the heartbeat, and digestive processes.

Sterilizing (Autoclave)

The process of using an autoclave to eliminate all forms of microbial life, including spores, by applying steam under pressure.

Celsius

A scale for measuring temperature where water freezes at 0 degrees and boils at 100 degrees under standard conditions.