The Marginal Propensity to Consume (Mpc)

question 16

Multiple Choice

The marginal propensity to consume (mpc)

• A)shows the fraction of total national income that is used for consumption
• B)added to the marginal propensity to save (mps) always equals zero
• C)is the relationship between a change in consumer purchases and the change in disposable income that allows consumption to change
• D)declines as disposable income declines, eventually becoming zero as disposable income reaches zero
• E)decreases as autonomous saving increases

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Definitions:

Tax

A mandatory fiscal fee or different form of levy placed on a taxpayer by a government entity to finance government expenditures and a range of public spending.

Inelasticities

A measure of the sensitivity, or lack thereof, of one variable to a change in another variable, typically used in economics to describe situations where changes in price have little to no effect on supply or demand.

Tax Burden

The total amount of taxes paid by individuals or businesses relative to their income, often analyzed to assess the impact of taxation on economic behavior.

Tax

A necessary financial obligation or other form of tax exacted from a taxpayer by a state institution with the aim of covering government expenses and various public financial needs.