If the marginal propensity to consume equals 0.75, then a $100 increase in after-tax disposable income leads to a _____ increase in consumption.Group of answer choices$0.75$75$100$25$0.25

The correct answer is: "$75"

Here's a step-by-step explanation:

1. The marginal propensity to consume (MPC) is the increase in consumer spending due to an increase in income. It is the proportion of an additional income that a consumer spends on consumption rather than saving.

2. If the MPC is 0.75, this means that for every additional dollar of income, the consumer will spend 75 cents and save 25 cents.

3. Therefore, if after-tax disposable income increases by $100, the increase in consumption would be 0.75 times$100, which equals $75.

4. Therefore, the correct answer is: "$75".

The correct answer is: "$75"

Here's a step-by-step explanation:

1. The marginal propensity to consume (MPC) is the increase in consumer spending due to an increase in income. It is the proportion of an additional income that a consumer spends on consumption rather than saving.

2. If the MPC is 0.75, this means that for every additional dollar of income, the consumer will spend 75 cents and save 25 cents.

3. Therefore, if after-tax disposable income increases by $100, the increase in consumption would be 0.75 times$100, which equals $75.

4. Therefore, the correct answer is: "$75".