The marginal propensity to consume is defined as
A) the change in consumption expenditure from a change in disposable income.
B) the average, after- tax consumption amount.
C) the desired amount of consumption expenditure as a proportion of disposable income.
D) what people spend out of total disposable income.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption expenditure that results from a change in disposable income. It is calculated as the ratio of the change in consumption to the change in disposable income. For example, an MPC of 0.8 means that for every $1 increase in disposable income, people will spend $0.80 (or 80 cents) and save $0.20 (or 20 cents).

The Marginal Propensity to Consume Is Defined as