Suppose that when your income increases by $300, your consumption expenditures increases by $240. Your marginal propensity to consume (MPC) is .
If your MPC was the same as the MPC for the economy as a whole, the expenditure multiplier for the economy would be .
Thus, a $4 million investment project would increase income by $ million in total.

The MPC is 0.8

The multiplier or k is 5

The increase in income would be $20 million.

Explanation:

The marginal propensity to consume (MPC) is the proportion of increased disposable income that consumers spend. It is a metric to quantify the induced consumption and how an increase in consumer spending occurs as a result of increase in income.

MPC is calculated as follows,

MPC = Change in consumer spending / change in income

MPC = 240 / 300

MPC = 0.8 or 80%

To calculate the multiplier, we simply use the following formula,

Multiplier or k = 1 / (1 - MPC)

k = 1 / (1 - 0.8)

k = 5

So, the expenditure multiplier for the economy would be 5.

To calculate the increase in income, we will multiply the investment amount by the expenditure multiplier.

Income increase = 4000000 * 5

Income increase = $20000000 or 20 million

answer; ///i believe that the correct answer is (post conventional)

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough