Which of the Following Best Expresses the Relationship Between the Marginal

question 10

Multiple Choice

Which of the following best expresses the relationship between the marginal propensity to consume (MPC ) and the average propensity to consume (APC ) ?

• A) The APC equals 1 minus the MPC.
• B) The APC equals the change in personal consumption divided by the change in disposable income; the MPC is the proportion of disposable income consumed.
• C) The APC is the proportion of total income consumed; the MPC is the proportion of the additional income consumed.
• D) The APC can never exceed the value 1; the MPC can exceed 1 at low income levels.
• E) The MPC deals with the consumption behavior of a household; the APC deals with the consumption behavior of society.