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Q: Generally, the value of MPC (Marginal Propensity to Consume) _____.
  • A. varies between (–) and (–)2
  • B. does not exceed 1 or fall below 0
  • C. varies between 1 and 2
  • D. remains constant at (–)1
Correct Answer: Option B - MPC, or (Marginal Propensity to Consume) is the proportion of extra income that a person spends instead of savings. Its value does not exceed 1 or fall below 0. The marginal propensity to consume is a metric that quantifies induced consumption, the concept that the increase in personal consumer spending occurs with an increase in disposable income.
B. MPC, or (Marginal Propensity to Consume) is the proportion of extra income that a person spends instead of savings. Its value does not exceed 1 or fall below 0. The marginal propensity to consume is a metric that quantifies induced consumption, the concept that the increase in personal consumer spending occurs with an increase in disposable income.

Explanations:

MPC, or (Marginal Propensity to Consume) is the proportion of extra income that a person spends instead of savings. Its value does not exceed 1 or fall below 0. The marginal propensity to consume is a metric that quantifies induced consumption, the concept that the increase in personal consumer spending occurs with an increase in disposable income.