The marginal propensity to consume is defined as
A)consumption divided by disposable income.
B)disposable income divided by consumption.
C)the change in consumption divided by the change in disposable income.
D)the change in disposable income divided by the change in consumption.
E)consumption divided by gross income.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is defined as the change in consumption divided by the change in disposable income. This means that for each additional dollar of disposable income, how much of it will be spent on consumption. The MPC is a key component in determining the multiplier effect in macroeconomics.

The Marginal Propensity to Consume Is Defined as