The size of the MPC is assumed to be
A) less than zero.
B) greater than one.
C) greater than zero but less than one.
D) two or more.

Question

Quizplus · Accepted Answer

The MPC (Marginal Propensity to Consume) is a fraction that lies between zero and one. It represents the increase in consumer spending resulting from an increase in income. A MPC of less than zero or greater than one would not make sense in this context. A value of exactly one would mean that all additional income is spent, while a value of zero would mean that no additional income is spent. Therefore, the best choice is C, greater than zero but less than one.

The Size of the MPC Is Assumed to Be