The marginal propensity to consume is
A) identical to the average propensity to consume
B) the inverse of the marginal propensity to save
C) the slope of the consumption function
D) the inverse of the expenditure multiplier
E) equal to the income tax rate

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is defined as the change in consumption that results from a one-unit change in income. It is represented by the slope of the consumption function, which shows how consumption changes with changes in income. The MPC is not the same as the average propensity to consume (APC), which is the ratio of consumption to income. While the MPC and the marginal propensity to save are related (as they must sum to 1), they are not inverses of each other. The MPC is also not related to the expenditure multiplier or the income tax rate.

The Marginal Propensity to Consume Is