The marginal propensity to consume (MPC)is typically
A) less than zero or greater than 1.0
B) equal to zero
C) equal to 1.0
D) between -1.0 and 1.0
E) between zero and 1.0

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is typically between zero and 1.0, as it measures the change in consumption in response to a change in income. A value of 0 indicates that there is no change in consumption with a change in income, while a value of 1.0 indicates that all additional income is spent on consumption. Values between 0 and 1.0 indicate that only a portion of additional income is spent on consumption. Values less than zero or greater than 1.0 indicate that consumption changes in the opposite direction of income changes, which is not typical behavior.

The Marginal Propensity to Consume (MPC)is Typically