The change in consumption divided by a change in income is called the:
A) consumption function.
B) marginal propensity to consume.
C) marginal propensity to spend.
D) spending function.
E) changing propensity to consume.

Question

Quizplus · Accepted Answer

The change in consumption divided by the change in income is the definition of the marginal propensity to consume (MPC). This represents the fraction of an increase in income that is spent on consumption, and is a key component in calculating the total effect of a change in spending or income on the economy.

The Change in Consumption Divided by a Change in Income