Marginal propensity to consume is equal to the change in ____ divided by the change in ____.
A)consumption spending; total income
B)saving; total income
C)saving; disposable income
D)consumption spending; disposable income

Question

Marginal propensity to consume is equal to the change in ____ divided by the change in ____.
A)​consumption spending; total income
B)​saving; total income
C)​saving; disposable income
D)​consumption spending; disposable income

Quizplus · Accepted Answer

Marginal propensity to consume (MPC) is the change in consumption spending divided by the change in disposable income. Since disposable income is a part of total income and saving is the difference between total income and consumption spending, options A and B are incorrect. Option C refers to the marginal propensity to save (MPS), which is the change in saving divided by the change in disposable income, not what is being asked in the question. Therefore, option D is the correct answer.

Marginal Propensity to Consume Is Equal to the Change in ____