If consumers spend 90 cents out of every extra dollar received,the
A)MPS is 0.90.
B)MPC is 0.90.
C)Multiplier is 0.90.
D)Multiplier is 9.

Question

Quizplus · Accepted Answer

MPC (Marginal Propensity to Consume) is the portion of each additional dollar of disposable income that is spent on consumption. In this scenario, if consumers spend 90 cents out of every extra dollar received, then the MPC is 0.90.

If Consumers Spend 90 Cents Out of Every Extra Dollar