Question
The marginal propensity to consume measures
the cyclical deficit
the structural deficit
how much consumption expenditure occurs at the equilibrium level of income.
how much of a change in consumption expenditure results from a change in disposable
income.
the cyclical deficit
the structural deficit
how much consumption expenditure occurs at the equilibrium level of income.
how much of a change in consumption expenditure results from a change in disposable
income.
Answers
GPT-4o mini
The marginal propensity to consume (MPC) measures **how much of a change in consumption expenditure results from a change in disposable income**. Specifically, it indicates the proportion of additional income that is spent on consumption rather than being saved. For example, if the MPC is 0.75, it means that for every additional dollar of disposable income, consumption increases by 75 cents.