Question

The size of the MPC is assumed to be

Multiple Choice
less than zero.
greater than one.
greater than zero but less than one.
two or more.

Answer 1

The size of the Marginal Propensity to Consume (MPC) is assumed to be **greater than zero but less than one**. This means that when people receive additional income, they will spend a portion of it, but not all of it, which reflects the behavior of saving some of the income.