The value of the marginal propensity to consume is ________.
A)equal to one
B)between zero and one
C)greater than one
D)less than zero

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the increase in consumer spending that occurs with each additional dollar of disposable income. It is a number between zero and one because consumers typically do not spend every dollar of their disposable income; they save some portion of it. A value of one would indicate that all additional income is spent, while a value greater than one would imply that consumers are spending more than their total income, which is not sustainable. A value less than zero would indicate that consumers are reducing their spending as their income increases, which is also unlikely.

The Value of the Marginal Propensity to Consume Is ________