The marginal propensity to consume measures
A) how much consumption expenditure occurs at the equilibrium level of income.
B) how much of a change in consumption expenditure results from a change in disposable income.
C) the cyclical deficit.
D) the structural deficit.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of a change in disposable income that is spent on consumption. It measures how much of a change in consumption expenditure results from a change in disposable income. It is calculated as the change in consumption expenditure divided by the change in disposable income.

The Marginal Propensity to Consume Measures