To determine the new consumption expenditure and the marginal propensity to consume (MPC) given the changes in disposable income and consumption expenditure, we can follow these steps:
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Identify the 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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Identify the initial consumption expenditure:
- Initial consumption expenditure = R4.2 trillion
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Let’s denote the new consumption expenditure as \( C \). According to the problem, we do not have the new consumption expenditure number yet.
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Change in consumption expenditure:
- Change in consumption expenditure = New consumption expenditure - Initial consumption expenditure
- This can be expressed as \( C - R4.2 trillion \)
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MPC (Marginal Propensity to Consume) is defined as the change in consumption divided by the change in disposable income: \[ \text{MPC} = \frac{\Delta C}{\Delta Y} \] where \( \Delta Y \) is the change in disposable income, and \( \Delta C \) is the change in consumption expenditure.
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Substituting in the values we have:
- Change in disposable income \( \Delta Y = R1 trillion \)
- Change in consumption expenditure \( \Delta C = C - R4.2 trillion \)
Thus, we rewrite the MPC formula as follows: \[ \text{MPC} = \frac{C - R4.2 trillion}{R1 trillion} \]
At this point, we need the new consumption expenditure \( C \) to calculate the MPC.
If you know the expected new consumption expenditure after the increase in disposable income, you can substitute that value into the equation above to find the MPC.
For example, if you have a hypothetical new consumption expenditure of R5 trillion: \[ \text{Change in consumption expenditure} = R5 trillion - R4.2 trillion = R0.8 trillion \] Substituting into the MPC formula gives: \[ \text{MPC} = \frac{R0.8 trillion}{R1 trillion} = 0.8 \]
If you provide the new consumption expenditure, I can help you calculate the MPC based on that information.