The greater is the marginal propensity to consume, the
A) smaller is the marginal propensity to save.
B) higher is the interest rate.
C) smaller is the average propensity to consume.
D) lower is the price level.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) measures the amount by which consumption spending increases when disposable income increases by one unit. If the MPC is high, it means that consumers tend to spend a large portion of any additional income they receive, leaving less for saving. Therefore, the higher the MPC, the smaller the marginal propensity to save (MPS).

The Greater Is the Marginal Propensity to Consume, the