The Formula for the Marginal Propensity to Consume Is

question 33

Multiple Choice

The formula for the marginal propensity to consume is:

• A) planned consumption spending divided by disposable income.
• B) disposable income minus saving.
• C) the change in planned consumption spending divided by the change in disposable income.
• D) disposable income minus government purchases, investment, and net exports.

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Definitions:

Normal Goods

Items for which demand increases as consumer income rises, showing a positive correlation between income and demand.

Law of Supply

A fundamental principle stating that, all else being equal, an increase in the price of a good will result in an increase in the quantity supplied.

Price-elasticity of Supply Coefficient

A numerical measure of how much the quantity supplied of a good responds to a change in its price.

Negative Sign

Generally represents an opposite direction of influence or a decrease in a mathematical or statistical context.