The marginal propensity to consume is:

Question

Quizplus · Accepted Answer

The marginal propensity to consume is the change in consumer spending divided by the change in aggregate disposable income. It represents the proportion of additional income that people will spend rather than save. Choice A is incorrect because the marginal propensity to consume and the marginal propensity to save are opposites, so if one is increasing, the other would be decreasing. Choice B is incorrect because it describes the savings rate, not the marginal propensity to consume. Choice D is incorrect because it does not accurately describe the concept of marginal propensity to consume.

The Marginal Propensity to Consume Is