C = 2,550 + (MPC)Y

question 48

Essay

C = 2,550 + (MPC)Y
I = 800
G = 1,100
NX = 50
If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

---

Definitions:

Demand Shift

A change in the quantity of a product that consumers are willing and able to buy at each and every price level, caused by factors other than the product's price.

Normal Good

A good for which demand increases as consumer income rises and decreases when consumer income falls.

Substitute

A good or service that can be used in place of another to satisfy consumer needs or wants.

Dr. Pepper

A brand of carbonated soft drink created in the United States and well-known for its unique flavor.