QUESTION1

Suppose an individual starts life at age 20 and plans to work until age 60 and will expected to die at age 80. His annual labour income is RM36, 000. From these statement;

a)Calculate his MPC

b)Calculate his monthly consumption.

c)Calculate his consumption if his income increased by RM3000 for only one year.

d)Calculate his consumption if his income increased by RM3000 every year.

e)What can you conclude from the answers to the question of c) and d) above?