The Marginal Propensity to Consume (MPC) is calculated by the change in savings divided by the change in income.

Here's how you calculate it:

1. Find the change in income: In year 2, Adam's income increased by $500 ($1500 - $1000).

2. Find the change in savings: In year 2, Adam's savings increased by $100 ($200 - $100).

3. Divide the change in savings by the change in income to find the MPC: $100 / $500 = 0.20.

So, Adam's MPC out of his $500 raise is 0.20. However, this option is not listed in the given choices.

Please note that the MPC is usually represented as a decimal, but can also be expressed as a percentage (in this case, 20%). If you meant to ask for the Marginal Propensity to Save (MPS), then the answer would be 0.20 or 20%. If you're looking for the MPC, it would be 1 - MPS = 0.80 or 80%.

Question

The Marginal Propensity to Consume (MPC) is calculated by the change in savings divided by the change in income.

Here's how you calculate it:

1. Find the change in income: In year 2, Adam's income increased by $500 ($1500 - $1000).

2. Find the change in savings: In year 2, Adam's savings increased by $100 ($200 - $100).

3. Divide the change in savings by the change in income to find the MPC: $100 / $500 = 0.20.

So, Adam's MPC out of his $500 raise is 0.20. However, this option is not listed in the given choices.

Please note that the MPC is usually represented as a decimal, but can also be expressed as a percentage (in this case, 20%). If you meant to ask for the Marginal Propensity to Save (MPS), then the answer would be 0.20 or 20%. If you're looking for the MPC, it would be 1 - MPS = 0.80 or 80%.

Knowee AI · Accepted Answer

The Marginal Propensity to Consume (MPC) is calculated by the change in savings divided by the change in income.

Here's how you calculate it:

1. Find the change in income: In year 2, Adam's income increased by $500 ($1500 - $1000).

2. Find the change in savings: In year 2, Adam's savings increased by $100 ($200 - $100).

3. Divide the change in savings by the change in income to find the MPC: $100 / $500 = 0.20.

So, Adam's MPC out of his $500 raise is 0.20. However, this option is not listed in the given choices.

Please note that the MPC is usually represented as a decimal, but can also be expressed as a percentage (in this case, 20%). If you meant to ask for the Marginal Propensity to Save (MPS), then the answer would be 0.20 or 20%. If you're looking for the MPC, it would be 1 - MPS = 0.80 or 80%.

Select Any One Of the Following Options: In year one, Adam earns $1,000 and saves $100. In year 2, Adam gets a $500 raise so that he earns a total of $1,500. Out of that $1,500, he saves $200. What is Adam?s MPC out of his $500 raise?0.50.0.80.1.00.0.75.

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