The marginal propensity to consume is always
A) a negative number
B) larger than 1.0
C) larger than 10
D) greater than zero and less than 0.5
E) greater than zero and less than 1.0

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is defined as the fraction of additional income that a consumer spends on consumption. Therefore, it is greater than zero and less than 1.0 because consumers will always spend some portion of extra income they receive, but not all of it. Additionally, it cannot be negative, larger than 1.0, or larger than 10 because those values would not make sense within the context of consumption behavior.

The Marginal Propensity to Consume Is Always