John Maynard Keynes's central proposition that a dollar increase in disposable income would increase consumption, but by less than the increase in disposable income, means the marginal propensity to consume (MPC) is:
A) greater than or equal to one.
B) equal to one.
C) less than one, but greater than zero.
D) negative.

Question

Quizplus · Accepted Answer

According to Keynes's central proposition, the MPC is less than one because consumption increases by less than the increase in disposable income. This implies that individuals tend to save a portion of their additional income, rather than spending it all. Therefore, the correct choice is C, which states that the MPC is less than one but greater than zero.

John Maynard Keynes's Central Proposition That a Dollar Increase in Disposable