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%.
D) percentage by which disposable income increases when consumption increases by 1%.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (mpc) refers to the change in consumption that occurs in response to a change in disposable income. Specifically, it is the amount by which consumption increases when disposable income increases by $1. Therefore, option B is the correct choice. Option A is incorrect because it has the cause and effect reversed, whereas options C and D are incorrect because they refer to percentage changes rather than absolute changes in consumption and income.

The Marginal Propensity to Consume (Mpc) Is The