If the consumption function is expressed as C = a + mpc × Y_D,then "mpc" represents A)autonomous consumer expenditure. B)the marginal propensity to consume. C)the expenditure multiplier. D)disposable income.

Question

Quizplus · Accepted Answer

mpc stands for marginal propensity to consume, which is the change in consumer spending that results from a change in disposable income. Therefore, option B is the correct choice. Options A, C, and D are incorrect because they refer to different concepts. Autonomous consumer expenditure is represented by "a" in the consumption function; the expenditure multiplier refers to the change in overall output resulting from a change in autonomous expenditure, while disposable income refers to the amount of income that remains after taxes and other expenses have been deducted.

If the Consumption Function Is Expressed as C = a