The greater is the marginal propensity to consume:
A)the smaller is the marginal propensity to save.
B)the higher is the interest rate.
C)the lower is the average propensity to consume.
D)the lower is the price level.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) measures the increase in consumption due to an increase in income. A higher MPC means that a larger proportion of the income increase will be used for consumption, leaving less for saving. Therefore, the greater the MPC, the smaller the marginal propensity to save (MPS).

The Greater Is the Marginal Propensity to Consume