The marginal propensity to consume (mpc)is the:
A)amount by which disposable income increases when consumption increases by $1.
B)amount by which consumption increases when disposable income increases by $1.
C)percentage by which consumption increases when disposable income increases by 1 percent.
D)percentage by which disposable income increases when consumption increases by 1 percent.

Question

Quizplus · Accepted Answer

The amount by which consumption rises when disposable income rises by $1 is called the marginal propensity to consume (mpc); economists assume that 0 < mpc < 1.

The Marginal Propensity to Consume (Mpc)is The