What Does the Marginal Propensity to Consume Tell Us

question 129

Multiple Choice

What does the marginal propensity to consume tell us?

• A)how much of our total income we spend on current consumption
• B)how much additional income is spent on consumption
• C)how much of aggregate expenditures will be allocated to consumption spending
• D)how much induced consumption there is in the economy
• E)the relationship between autonomous and induced consumption

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Definitions:

Life-cycle Pattern

A theory suggesting that individuals plan their consumption and savings behavior over their lifetime, taking into account expected income changes and retirement needs.

Income Variation

Fluctuations in an individual's or household's income due to factors like employment changes, investment returns, or economic conditions.

Annual Income

The total amount of income received over a one year period from all sources including wages, salaries, benefits, dividends, and interest.

Total Utility

The total satisfaction or benefit a consumer receives from consuming a particular quantity of goods and services.