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What are the significances of Marginal Propensity to Consume?

In: Economics [Edit categories]

Answer:

The marginal propensity to consume (MPC) is an economic concept to show the increase in personal consumer spending or consumption that occurs with an increase in disposable income. Here is the formula:

MPC = change in consumption/change in disposable income

A change in disposable income results in the new income either being spent or saved. This is the Marginal Propensity to Consume (MPC) or the Marginal Propensity to Save (MPS).

MPC + MPS = 1

First answer by Lolsuperking. Last edit by Lolsuperking. Contributor trust: 2 [recommend contributor ]. Question popularity: 3 [recommend question].

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