The marginal propensity to consume refers to
A) the additional consumption expenditure that occurs out of an additional dollar of investment.
B) the additional saving that occurs out of an additional dollar of disposable income.
C) total consumption expenditure divided by total disposable income.
D) the additional consumption expenditure that occurs out of an additional dollar of disposable income.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the increase in consumer spending resulting from an increase in disposable income. In other words, it is the additional consumption expenditure that occurs out of an additional dollar of disposable income.

The Marginal Propensity to Consume Refers to