Answer :
Given that autonomous consumption equals $1,000, disposable income equals $20,000, and the mpc equals 0.80, the level of 17,000 .
C=A+(B*Yd)
C=current consumption; a = autonomous consumption; b=marginal propensity to consume; Yd = Disposable Income
C=1000+(.80*20000)
C=1000+(16000)
C=17000
When consumption and income change, C and Y, respectively, the marginal propensity to consume is equal to both. MPC equals 0.8 / 1 = 0.8 if consumption rises by 80 cents for every additional dollar of income.
The relationship between income and consumption can be quantified with the aid of MPC. MPC is the percentage of a household's extra income that is consumed or spent. For instance, if the marginal propensity to consume is 45 percent, then out of every additional dollar earned, 45 cents are spent.
The benefit of MPC is that it is a multivariable controller that controls the outputs concurrently by accounting for all of the interactions between system variables. The ability of MPC to manage constraints is another strength. Constraints are necessary because breaking them can have unfavorable effects.
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