The MPC and MPS measure changes in consumption expenditure and saving that result from changes in
A) expected inflation.
B) government expenditures on goods and services.
C) expected future income.
D) disposable income.

Question

Quizplus · Accepted Answer

MPC (marginal propensity to consume) measures the change in consumption expenditure resulting from a change in disposable income, while MPS (marginal propensity to save) measures the change in saving resulting from a change in disposable income. Therefore, the correct choice is D - disposable income.  A, B, and C are incorrect because they do not directly relate to changes in consumption expenditure and saving.

The MPC and MPS Measure Changes in Consumption Expenditure and Saving