Marginal propensity to consume:
A) is the change in production resulting from a given change in disposable income.
B) shows the amount households want to spend on goods and services at different levels of disposable income.
C) is the change in consumption resulting from a given change in disposable income.
D) is the change in saving resulting from a given change in disposable income.

Question

Quizplus · Accepted Answer

Marginal propensity to consume (MPC) refers to the change in consumption resulting from a given change in disposable income. It shows the proportion of additional income that is spent on goods and services, rather than saved. A high MPC indicates that consumers are likely to spend most of any additional income they receive, while a low MPC suggests that they are more likely to save it.

Marginal Propensity to Consume