Question

The marginal propensity to consume is the: a overall portion of disposable income that is consumed (and not saved) b amount by which disposable income increases when consumption increases by $1.c portion of a one dollar bill that is on average spent on consumption.d amount by which consumption increases when disposable income increases by $1.

Answer 1

Answer:

.d amount by which consumption increases when disposable income increases by $1.

Explanation:

The marginal propensity to consume is measured by measuring what proportion of a $1 increase in income is spend on consumption, so if the marginal propensity to consume is 0.85 it means that when income increases by $1 consumption will increase by $0.85 as (0.85*1)= 0.85