The marginal propensity to consume (MPC) is defined to be:
A) the change in consumption divided by the change in disposable income.
B) total income divided by total consumption.
C) total consumption divided by the change in disposable income.
D) the change in consumption divided by total disposable income.

Question

Quizplus · Accepted Answer

The definition of marginal propensity to consume (MPC) is the change in consumption divided by the change in disposable income. Therefore, the correct answer is choice A. Choice B is incorrect because it defines the average propensity to consume (APC), which is total consumption divided by total income. Choice C and D are both incorrect because they have the wrong denominator - MPC should be measured against the change in disposable income, not total disposable income.

The Marginal Propensity to Consume (MPC) Is Defined to Be