1.

Define marginal propensity to consume (MPC).

Answer»

Marginal Propensity to Consume: The marginal propensity to consume may be defined as the ratio of the change in the consumption to the change in income. Algebraically it may be expressed as under:

MPC = ΔC/ ΔY

Where, ΔC = Change in Consumption; ΔY = Change in Income

MPC is positive but less than unity, 0 < ΔC/ ΔY < 1



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