If a family's MPC is 0.7, it means that the family is
A) operating at the break-even point.
B) spending seven-tenths of any increment to its income.
C) necessarily dissaving.
D) spending 70 percent of its disposable income.

Question

Quizplus · Accepted Answer

The Marginal Propensity to Consume (MPC) is the proportion of any additional income that a family spends rather than saves. If a family's MPC is 0.7, it means they spend 70% of any additional income they receive, which is what option B states.

If a Family's MPC Is 0