When consumers realize additional income in a household and spend the additional monies, the portion of the additional income that is spent is measured by the
A) credit increase theory.
B) marginal propensity to consume.
C) aggregate demand factor.
D) measure of individual wealth.

Question

Quizplus · Accepted Answer

The portion of additional income that is spent by consumers is measured by the marginal propensity to consume. This refers to the increase in consumer spending that occurs as a result of an increase in disposable income.

When Consumers Realize Additional Income in a Household and Spend