As per our research the complete question is
The marginal propensity to consume (mpc) is the:
A) amount by which disposable income increases when consumption increases by $1.
B) amount by which consumption increases when disposable income increases by $1.
C) percentage by which consumption increases when disposable income increases by 1%.
D) percentage by which disposable income increases when consumption increases by 1%
Answer:
The correct answer is B) amount by which consumption increases when disposable income increases by $1.
Step-by-step explanation:
The marginal propensity to consume (mpc) is the extra consumer spending arising from an increase in national income
Suppose you receive a $500 bonus on top of your normal annual earnings. You suddenly have $500 more in income than you did before. If you decide to spend $400 of this marginal increase in income on a new suit and save the remaining $100, your marginal propensity to consume will be 0.8 ($400 divided by $500).
