What has evidence from modern economies shown to be true of the MPC?
A)It is higher among richer members of a society.
B)It is higher among poorer members of a society.
C)It does not depend on the level of income.
D)It is on average equal to 0.53.

Question

Quizplus · Accepted Answer

Evidence from modern economies has shown that the MPC is higher among poorer members of a society. This is because people with lower incomes tend to spend a higher proportion of their income on consumption, whereas those with higher incomes are more likely to save a larger proportion. Therefore, a higher proportion of the income of poorer individuals is injected back into the economy, leading to a higher MPC.

What Has Evidence from Modern Economies Shown to Be True