Question

Define marginal propensity to consume.

Answer 1

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The marginal propensity to consume (MPC) is the increase in consumer spending due to an increase in income. This can be expressed as ∆C/∆Y, which is a change in consumption over the change in income.

Answer 2

The "marginal propensity" to consume is defined as calculated quantification of money that consumers are ready to spend.

EXPLANATION:

• The term "Marginal propensity" to consume is term used in economics.
• It measures monetary value which consumer is willing to spend to buy goods and services instead of saving it.
• The "marginal propensity" to consume tends to increase economic activities of country by keeping cash flowing and by not keeping it stagnant.
• It also helps in increasing trade value and quality and cost of products because it increases healthy competition among companies and in which consumers are ultimately benefitted.