00:01
So here we are told that there's a marginal propensity to consume of 0 .8.
00:05
And you'll remember that the marginal propensive to consume relates changes in income to changes in consumption, right? so again, we know that y is c plus i plus g plus an x.
00:17
Let's try to path out how this changes.
00:21
So there's an increase in aggregate demand of 100 billion, right? so something over here, we're not sure what, is increasing one.
00:29
So aggregate demand plus 100.
00:33
This leads output to go up by 100.
00:37
But now you see that the marginal propensity to consume means that consumption is going to respond.
00:42
When output goes up by 100, consumption goes up by 100 times the mpc.
00:48
That's the definition of the mpc...