The marginal propensity to consume is the
A) fraction of a change in consumption expenditure that is not saved.
B) amount saving increases when consumption expenditure decreases.
C) fraction of a change in saving spent on consumption expenditure.
D) fraction of a change in disposable income spent on consumption expenditure.

Question

Quizplus · Accepted Answer

The marginal propensity to consume is the fraction of a change in disposable income (not saving) that is spent on consumption expenditure. This means that as disposable income increases, the amount spent on consumption expenditure also increases, but not all of the increase is spent as some may be saved.

The Marginal Propensity to Consume Is the