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Answer to Question #8718 in Macroeconomics for Clarisa

Question #8718
The marginal propensity to consume is
Expert's answer
In economics, the marginal propensity to consume (MPC) is an empirical metric that quantifies induced consumption, the concept that the increase in personal consumer spending (consumption) occurs with an increase in disposable income (income after taxes and transfers). The proportion of the disposable income which individuals desire to spend on consumption is known as propensity to consume. Marginal propensity to consume (mpc) is the proportion of additional income that an individual desires to consume. For example, if a household earns one extra dollar of disposable income, and the marginal propensity to consume is 0.65, then of that dollar, the household will spend 65 cents and save 35 cents.

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