If the MPC equals 0.75, then
A) consumption expenditure is always more than disposable income.
B) for every $100 increase in consumption expenditure, disposable income increases by $75.
C) for every $100 increase in disposable income, saving increases by $25.
D) for every $100 increase in disposable income, saving increases by $75.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) of 0.75 means that for every $100 increase in disposable income, $75 is spent on consumption, leaving $25 as savings.

If the MPC Equals 0.75, Then