The marginal propensity to consume (MPC, C_y) A) is the amount by which consumption spending changes in response to a $1 change in total income. B) is the amount households would spend on consumption goods if they had no income at all. C) is the amount by which consumption spending changes in response to a $1 change in disposable income. D) is the amount by which consumption spending would change in response to a $1 change in household wealth.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is defined as the ratio of the change in consumption to the change in disposable income, indicating how much consumption changes when disposable income increases by $1.

The Marginal Propensity to Consume (MPC, Cy)

The Marginal Propensity to Consume (MPC, C_y)