Question

Suppose Erin receives an inheritance worth $50,000. If her MPC is 0.75, how much of the additional $50,000 that Erin earns will be spent

Answer 1

$37,500

Step-by-step explanation:

Since the MPC is the proportion of aggregate increase in income spent by consumer on consumption of goods or services.

MPC is already given as 0.75

So We will simply calculate the amount spent by Erin by multiplying Erin's additional income to MPC

(0.75 X $50,000) = $37,500