If the marginal propensity to consume is 0.5, then $50 of every additional $100 of income will be spent on consumption.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) refers to the increase in consumer spending that results from an increase in income. An MPC of 0.5 means that for every additional $100 of income, $50 will be spent on consumption. So the statement "If the marginal propensity to consume is 0.5, then $50 of every additional $100 of income will be spent on consumption" is true.

If the Marginal Propensity to Consume Is 0