The marginal propensity to consume is always
A) greater than 1
B) between 0 and 1
C) less than 0
D) between 0 and -1
E) between 0 and 0.6

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the increase in consumer spending when disposable income increases by $1. It is a fraction or a ratio and is always between 0 and 1. A value of 1 would imply that a person spends all of their additional income, while a value of 0 would imply that they save all of it. Therefore, the correct answer is B - between 0 and 1. The other options are incorrect.

The Marginal Propensity to Consume Is Always