The change in consumption divided by a change in income is defined as:
A) the marginal propensity to consume.
B) autonomous consumption.
C) the consumption function.
D) Keynes' absolute income hypothesis.
E) transitory consumption.

Question

Quizplus · Accepted Answer

The definition given in the question is the exact definition of marginal propensity to consume (MPC), which is the ratio of the change in consumption to the change in income. Therefore, the correct answer is A. Autonomous consumption is the amount of consumption that is not influenced by changes in income, the consumption function is a mathematical relationship between consumption and income, Keynes' absolute income hypothesis is a theory that suggests that people's consumption is based on their current income level rather than their long-term expectations, and transitory consumption is a type of consumption that is not consistent over time.

The Change in Consumption Divided by a Change in Income