Question

David receives a tax refund of $800. He spends $600 and saves $200. David's marginal propensity to consume is:

Answer 1

Answer:

0.75

Explanation:

David receives a tax refund of $800

He spends $600 and then saves $200

Therefore David's marginal propensity to consume can be calculated as follows

= 600/800

= 0.75

Hence David marginal propensity to consume is 0.75