The marginal propensity to consume measures
A) the fraction of a change in disposable income that is spent on consumption expenditure.
B) what percentage of disposable income goes to saving.
C) how much of a given level of disposable income is consumed.
D) how much consumption expenditure occurs at the equilibrium level of income.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) measures the fraction of a change in disposable income that is spent on consumption expenditure. For example, if an individual's disposable income increases by $100 and they spend $80 of that increase, then their MPC is 0.8 ($80/$100).

The Marginal Propensity to Consume Measures