What does the marginal propensity to consume measure?
A) the amount of total income spent on current consumption
B) the amount of additional income spent on consumption
C) the amount of aggregate expenditures that will be allocated to consumption spending
D) the extent of induced consumption that occurs in the economy

Question

What does the marginal propensity to consume measure?  
A) the amount of total income spent on current consumption 
B) the amount of additional income spent on consumption 
C) the amount of aggregate expenditures that will be allocated to consumption spending 
D) the extent of induced consumption that occurs in the economy

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) measures the amount of additional income that is spent on consumption. In other words, it measures the increase in consumption that occurs in response to an increase in income. For example, if the MPC is 0.8, it means that for every additional dollar of income earned, 80 cents will be spent on consumption.

What Does the Marginal Propensity to Consume Measure