The marginal propensity to consume refers to _____.
A) the extra consumption when income increases by an extra unit
B) the proportion of total income which is spent on consumption
C) the proportion of total income that is spent on inferior goods
D) the decrease in consumption that will result from an increase in income

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of additional income that a household consumes rather than saves. It specifically refers to the increase in personal consumer spending (consumption) that occurs with an increase in disposable income.

The Marginal Propensity to Consume Refers to _____