2012 Macro Multiple Choice (MPC/MPS)
Cheat Sheet here
Answer - (E)
In AP econ you can choose to do two things with your money, spend it (MPC), or save it (MPS).
Answer - (D)
The multiplier is 1/1-.75 = 1/.25 = 4 x 2m = 8m change
Answer - (B)
Ok, so the point is to know that the MPC is about how much is spent from an extra dollar of income.
The extra dollar is a percentage spent of an increase or decrease, specifically the change in income.
Here the change in income is from an income of $40,000 to $50,000
This is a $10,000 change in income
$10,000 x .8 = 8,000