The marginal propensity to consume (MPC) can best be defined as that fraction of
A) real disposable income that is consumed.
B) real disposable income that is not consumed.
C) a change in real disposable income that is spent.
D) a change in real disposable income that is saved.

Question

Quizplus · Accepted Answer

MPC is the proportion of an increase in income that is spent on consumption. It measures how consumption changes with a change in disposable income.

The Marginal Propensity to Consume (MPC) Can Best Be Defined