If the marginal propensity to consume was 0.9, it would mean that:
A) consumers spend $9 out of every $10 of additional disposable income.
B) consumers save $9 out of every $10 of additional disposable income.
C) consumers spend $1 out of every $10 of additional disposable income.
D) people should save more.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) measures the proportion of an increase in disposable income that consumers will choose to spend rather than save. An MPC of 0.9 means that consumers will spend 90% of any additional disposable income they receive, indicating a high level of consumption spending.

If the Marginal Propensity to Consume Was 0