To determine the new level of consumption expenditure and the marginal propensity to consume (MPC), we need to analyze the change in disposable income and the change in consumption expenditure.
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Change in Disposable Income:
- Initial disposable income: R11 trillion
- New disposable income: R12 trillion
- Change in disposable income: R12 trillion - R11 trillion = R1 trillion
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Change in Consumption Expenditure: We need to find the new consumption expenditure, which we'll denote as \( C \).
- Initial consumption expenditure: R4.2 trillion
- We can use the formula for MPC to find \( C \):
\[ MPC = \frac{\Delta C}{\Delta Y} \]
where \(\Delta C\) is the change in consumption and \(\Delta Y\) is the change in income.
We know \(\Delta Y = R1 trillion\).
We also know that: \[ \Delta C = C - 4.2 , (where , C , is , the , new , consumption , expenditure) \]
Plugging into the formula for MPC: \[ MPC = \frac{C - 4.2}{1} \]
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Once we find \( C \), the next step is to calculate the MPC. We have some choices for \( C \) provided. Let's test them.
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If we check for \( C = R5.0 trillion \): \[ MPC = \frac{5.0 - 4.2}{1} = 0.8 \] This matches the option \( R5.0 trillion; 0.80 \).
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For completeness, let's check the other options:
- If \( C = R4.4 trillion \): \[ MPC = \frac{4.4 - 4.2}{1} = 0.2 \] (not a choice)
- If \( C = R5.5 trillion \): \[ MPC = \frac{5.5 - 4.2}{1} = 1.3 \] (not a choice)
- If \( C = R4.4 trillion \): \[ MPC = \frac{4.4 - 4.2}{1} = 0.2 \] (not a choice)
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The only feasible solution based on calculations is:
- Consumption expenditure increases from R4.2 trillion to R5.0 trillion (which matches) and the MPC must equal 0.80.
Thus, the answer is:
R5.0 trillion; 0.80
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