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) refers to the percentage of an additional dollar of disposable income that is spent on consumption. In this case, the MPC is 0.90, meaning that for every extra dollar received, consumers will spend 90 cents on consumption.

If Consumers Spend 90 Cents Out of Every Extra Dollar