The debate about different consumption theories can be viewed as a debate over whether
A)the consumption of durable or non-durable goods should be considered
B)random events that can change consumption behavior really do occur
C)liquidity constraints do ever exist
D)the marginal propensity to consume is large or small
E)the average propensity to consume is less or greater than 1

Question

Quizplus · Accepted Answer

The debate about different consumption theories is mainly focused on the size of the marginal propensity to consume (MPC) - which is the proportion of each additional dollar of income that is spent on consumption. Some economists argue that the MPC is large, meaning that a change in income has a big effect on consumption, while others argue that it is small. This debate is fundamental to understanding the impact of economic policies, such as fiscal stimulus or taxation.

The Debate About Different Consumption Theories Can Be Viewed as a Debate