Which of the following best expresses the relationship between the marginal propensity to consume (MPC ) and the average propensity to consume (APC ) ?
A) The APC equals 1 minus the MPC.
B) The APC equals the change in personal consumption divided by the change in disposable income; the MPC is the proportion of disposable income consumed.
C) The APC is the proportion of total income consumed; the MPC is the proportion of the additional income consumed.
D) The APC can never exceed the value 1; the MPC can exceed 1 at low income levels.
E) The MPC deals with the consumption behavior of a household; the APC deals with the consumption behavior of society.
Correct Answer:
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