If the Marginal Propensity to Consume (MPC)is Equal to 0

question 21

Multiple Choice

If the marginal propensity to consume (MPC) is equal to 0.9, an increase in household income causes desired consumption expenditure to

• A)rise by less than the full increase in income.
• B)rise by more than the increase in income.
• C)remain constant, because the MPC is also constant.
• D)fall, as an increase in income will increase saving.
• E)rise by the full increase in income.