The equation is the
A) average propensity to consume.
B) average propensity to save.
C) marginal propensity to consume.
D) marginal propensity to save.

Question

The equation is the 
A) average propensity to consume. 
B) average propensity to save. 
C) marginal propensity to consume. 
D) marginal propensity to save.

Quizplus · Accepted Answer

The equation given is in the format of the Keynesian consumption function, which is C = a + bY, where C is consumption, Y is income, a is autonomous consumption, and b is the marginal propensity to consume (MPC). Therefore, the coefficient in front of the Y variable in the given equation (9c5d_b643_8fb0_9d99dcd1f277) represents the MPC, which is the change in consumption for a change in income.

The Equation Is the