The marginal propensity to consume is
A)That part of the average consumer dollar that goes to saving.
B)The same as the spending multiplier.
C)The change in consumption divided by the change in disposable income.
D)Always equal to 1.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in disposable income. For example, if a household's disposable income increases by $100 and its consumption increases by $80, then the MPC is 0.8 ($80/$100). The MPC represents the fraction of additional income that is spent on consumption.

The Marginal Propensity to Consume Is