Which of the following best defines the marginal propensity to consume (MPC)?
A) the fraction of extra income that a household consumes rather than saves
B) the fraction of extra income that a household either consumes or saves
C) the fraction of total income that a household consumes rather than saves
D) the fraction of total income that a household either consumes or saves

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is defined as the fraction of extra income that a household consumes rather than saves. In other words, it measures the proportion of additional income that is spent on goods and services instead of being saved for future use.

Which of the Following Best Defines the Marginal Propensity to Consume