How much consumption will increase when income increases by Rs. 5000 at given marginal propensity to consume of 0.60.

Increase in consumption= Rs. 3000

The correct answer is Option (3) → Increase in consumption= Rs. 3000

Change in Consumption=MPC×Change in Income

• MPC (Marginal Propensity to Consume) = 0.60

• Change in Income = ₹5000

Change in Consumption=0.60×5000 = 3,000