If a family's MPC is 0.7, it means that the family is:
A) Operating at the break-even point
B) Spending seven-tenths of any increment to its income
C) Necessarily dissaving
D) Spending 70 percent of its disposable income

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) measures the fraction of any increment to income that is spent on consumption. An MPC of 0.7 means that the family spends seven-tenths of any increment to its income.

If a Family's MPC Is 0