An MPC value of less than 1.0 indicates that as income increases:
A) Consumption also increases, and by more than the increase in income
B) Consumption also increases, and at the same rate as the increase in income
C) Consumption will go in the opposite direction and decrease
D) Consumption also increases, though not as much as income

Question

Quizplus · Accepted Answer

A MPC value of less than 1.0 indicates that consumption will increase, but not as much as income increases. This means that individuals are saving a portion of their additional income instead of spending it all on consumption.

An MPC Value of Less Than 1