Question

The marginal propensity to consume refers to the proportion of the next dollar of: _______________ a) savings that is transformed into consumption. b) government spending that trickles down to consumers. c) income that is devoted to consumption. d) business investment that is devoted to consumer products. e) the economy has the greatest effect on policies aimed at correcting fluctuations in the

Answer 1

Answer: Option C  

         

Explanation: In simple words, marginal propensity to consume refers to the proportion of the extra income that the households spent or consume for their satisfaction.

Thus phenomenon states that when the income of the consumer increases their disposable income also increases resulting in the inducement of consumption.

Hence from the above we can conclude that the correct option is C.