In year one, Adam earns $1,000 and saves $100. In year 2, Adam gets a $500 raise so that he earns a total of $1,500. Out of that $1,500, he saves $200. What is Adam's MPC out of his $500 raise?

a. 0.50.

b. 0.75.

c. 0.80.

d. 1.00.

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Mr A consumption in first year is Earning Saving 10... View the full answer