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 fraction of additional income that households are likely to spend on consumption rather than save. For example, if the MPC is 0.75, it means that for every additional dollar of disposable income, consumption would increase by 75 cents.
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
1 answer
1 answer