The marginal propensity to consume is
A) consumption times income.
B) the amount of consumption at a specific level of income.
C) a change in saving divided by a change in consumption.
D) the fraction of a change in income that is consumed or spent.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of a change in income that is consumed or spent. In other words, it measures how much of each additional dollar of income is spent on consumption. For example, if a household's MPC is 0.8, then for every additional dollar of income, the household will spend 80 cents on consumption and save 20 cents.

The Marginal Propensity to Consume Is