Define the Marginal Propensity to Consume (MPC)and the Marginal Propensity

question 81

Essay

Define the marginal propensity to consume (MPC)and the marginal propensity to save (MPS), and explain why MPC + MPS always equals 1.

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Definitions:

Production Costs

The total expense incurred in manufacturing a product or providing a service, including raw materials, labor, and overheads.

Central Bank

A nation's principal monetary authority, which regulates the money supply and interest rates in pursuit of economic objectives.

Money Supply

The cumulative total of monetary resources within an economy at a specific period.

Unemployment Rate

The rate of joblessness among individuals in the labor force who are actively seeking work.