Question

which of the following is the true concerning the relation ship between the marginal propensity to consume and the consumption function

Answer 1

Explanation:

According to the theory prescribed by Keynes, the value of the marginal propensity to consume is less than one, which is expressed by the following formula:

Marginal Propensity to Consume(MPC) <1.

This is the relationship that exists between MPC and consumption function.

Marginal Propensity is spent by the consumers by consuming goods which is a fraction of aggregate raise in terms of payment.

Answer 2

Answer:

The marginal propensity to consume (MPC) is the percentage of disposable income that consumers spend on goods and services (as opposed to saving). Therefore, the slope of the consumption function will equal this percentage since that is the amount of each dollar that will be spend instead of saved.