What is true of the size of the MPC?
A)It is less than zero.
B)It is greater than one.
C)It is greater than zero,but less than one.
D)It is equal to one.

Question

Quizplus · Accepted Answer

The MPC (Marginal Propensity to Consume) is a fraction of a given increase in income that is spent on consumption. It represents the proportion of additional income that is consumed (spent) rather than saved. Therefore, the MPC is always greater than zero as any increase in income leads to some increase in consumption. However, it cannot be greater than one because people do not spend all their income, they save some portion of it. Therefore, the correct answer is C, which states that the MPC is greater than zero but less than one.

What Is True of the Size of the MPC