If you fit a line through a scatter diagram of points that represent coordinates of consumer spending and disposable income, the slope of this line will equal the
A)propensity to consume
B)variable propensity to consume.
C)marginal propensity to consume.
D)average propensity to consume.

Question

If you fit a line through a scatter diagram of points that represent coordinates of consumer spending and disposable income, the slope of this line will equal the
A)propensity to consume 
B)variable propensity to consume.
C)marginal propensity to consume.
D)average propensity to consume.

Quizplus · Accepted Answer

The slope of the line represents the change in dependent variable (consumer spending) for a unit change in independent variable (disposable income). This is the definition of marginal propensity to consume (MPC), which is the proportion of an increase in disposable income that is spent on consumption. Therefore, the slope of the line equals the MPC.

If You Fit a Line Through a Scatter Diagram of Points