The marginal propensity to consume is found by
A) dividing the change in disposable income by the change in consumption expenditure.
B) dividing consumption expenditure by disposable income.
C) dividing the change in consumption expenditure by the change in disposable income.
D) dividing disposable income by consumption expenditure.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) measures the change in consumption expenditures that result from a change in disposable income. It is found by dividing the change in consumption expenditure by the change in disposable income. Option A and D have the variables in the wrong order, while option B divides spending by income instead of the other way around.

The Marginal Propensity to Consume Is Found by