In the consumption function C = a + c(Y -T),the "marginal propensity to consume" appears as
A)a.
B)c.
C)cY.
D)-cT.

Name: In the consumption function C = a + c(Y -T),the "marginal propensity to consume" appears as A)a. B)c. C)cY. D)-cT.
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Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption resulting from a change in income. In the consumption function C = a + c(Y -T), c represents the MPC, as it is the coefficient of the (Y - T) term. Therefore, the correct answer is B.

In the Consumption Function C = a + C(Y -T),the