The marginal propensity to consume is:
A)the relationship between a change in consumption and a change in income.
B)the relationship between a change in consumption and a change in saving.
C)the relationship between changes in consumption and changes in net wealth.
D)the ratio of income to consumption at any given level of income.
E)the ratio of total consumption to total saving.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the relationship between a change in consumption and a change in income. It measures the increase in consumer spending that results from a marginal increase in disposable income. For example, if a person's disposable income increases by $100 and they spend an additional $80, their MPC would be 0.8 ($80/$100).

The Marginal Propensity to Consume Is