The marginal propensity to consume is
A) consumption divided by disposable income
B) national income divided by consumption
C) the change in national income caused by a $1 change in consumption
D) the change in consumption caused by a $1 change in disposable income
E) the percentage increase in consumption caused by a 1% decrease in savings

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption caused by a $1 change in disposable income. It is typically represented as a decimal between 0 and 1. For example, if an individual's disposable income increases by $100, and they spend $80 of that increase, the MPC would be 0.8.

The Marginal Propensity to Consume Is