The Marginal Propensity to Consume Is Equal to

question 462

Multiple Choice

The marginal propensity to consume is equal to

• A) what people spend out of total disposable income.
• B) the desired amount of consumption expenditure as a proportion of disposable income.
• C) the average, after-tax consumption amount.
• D) the change in consumption expenditure resulting from a change in disposable income.

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Definitions:

U.S. Income Tax

A tax imposed by the U.S. government on the income earned by individuals, corporations, trusts, and other legal entities.

Saving

The process of setting aside a portion of current income for future use or for investment purposes.

Consumption Tax

Taxes applied on spending on goods and services, such as sales tax or Value Added Tax (VAT).

Income Tax

A tax levied by governments on individuals' or entities' income. The rate can vary based on income levels or earnings.