The marginal propensity to consume (MPC) is calculated as:
A) the change in consumption divided by the change in disposable income.
B) total income divided by total consumption.
C) total consumption divided by the change in disposable income.
D) the change in consumption divided by total disposable income.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the ratio of the change in consumption to the change in disposable income. Therefore, the correct formula is A, where the change in consumption is divided by the change in disposable income. This gives a measure of how much additional spending (consumption) will result from a given increase in disposable income.

The Marginal Propensity to Consume (MPC) Is Calculated As