The smaller the amount saved out of a change in disposable income, the
A) smaller the MPC.
B) more horizontal the consumption function.
C) larger the MPC.
D) smaller is autonomous consumption.
E) more net taxes affect consumption.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of additional income that is spent on consumption. If a smaller amount is saved from a change in disposable income, it means a larger portion is consumed, indicating a larger MPC.

The Smaller the Amount Saved Out of a Change in Disposable