A given change in disposable income would have the smallest effect on consumption with which of the following marginal propensities to consume?
A) 0.2
B) 0.4
C) 0.6
D) 0.8

Question

Quizplus · Accepted Answer

A smaller marginal propensity to consume (MPC) means that a smaller portion of any change in disposable income will be spent on consumption. Therefore, an MPC of 0.2 will have the smallest effect on consumption.

A Given Change in Disposable Income Would Have the Smallest