If the marginal propensity to consume is 0.9, it would mean that:
A) consumers spend $9 out of every $10 of additional disposable income.
B) consumers save $9 out of every $10 of additional disposable income.
C) consumers spend $1 out of every $10 of additional disposable income.
D) consumers spend $9.90 out of every $10 of additional disposable income.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the proportion of additional disposable income that is spent rather than saved. An MPC of 0.9 means that consumers spend 90% of every additional dollar of disposable income. Therefore, A is the correct answer.

If the Marginal Propensity to Consume Is 0