The marginal propensity to consume refers to the
A) difficulty that people have with certain consumption decisions.
B) last minute purchases that everyone makes.
C) many consumption choices that people face.
D) fraction of a change in income that an individual spends on consumption expenditure.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of a change in income that an individual spends on consumption expenditure. It is calculated as the change in consumption expenditure divided by the change in income. For example, if a person's income increases by $100 and their consumption expenditure increases by $80, then their MPC is 0.8 ($80/$100).

The Marginal Propensity to Consume Refers to the