Answer to Question #52907 in Macroeconomics for gagandeep singh

Question #52907
(a) Describe what is meant by the marginal propensity to consume (mpc) and give its formula.
1
Expert's answer
2015-06-06T00:00:42-0400
Marginal propensity to consume (mpc) is the proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving it.
It can be calculated using the following formula:
MPC = ∆C/∆Y where ∆C is the change in consumption, and ∆Y is the change in disposable income that produced the consumption.

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