Economic math problem, please help?

Question

If autonomous consumption rises by $60 and, as a result, Real GDP rises by $300, then the marginal propensity to consume is?

Answer 1

ΔY/ΔC=1/(1-MPC)

ΔY=+300

ΔC=+60

300/60=1/(1-MPC)=5

1-MPC=1/5

1-1/5=MPC

MPC=4/5=8/10=0.8

Answer 2

MPC - 0.8. This requires a bit of algebra.

The Multiplier, K = (change in Y)/(change in autonomous consumption) which also = 1/(1-MPC). Since you are given Change in Y (300) and change in A (60), you work out K to be 5. Since this is equal to 1/(1-MPC), as stated before, with a bit of rearranging we get to 5xMPC = 4, which turns out to be 0.8.