The change in consumption expenditure divided by the change in disposable income that caused the consumption change is called
A) the marginal propensity to consume.
B) autonomous consumption.
C) the average propensity to consume.
D) the consumption factor.

Question

Quizplus · Accepted Answer

The definition given in the question is that of marginal propensity to consume (MPC). Therefore, the answer is A. Autonomous consumption refers to the level of consumption that exists even at zero disposable income. Average propensity to consume (APC) is the total consumption divided by total disposable income. There is no such term as consumption factor.

The Change in Consumption Expenditure Divided by the Change in Disposable