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Questions
Explain MPC.
Explain Marginal propensity to consume.
Explain
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Solution
Marginal propensity to consume refers to the ratio of change in consumption to change in income.
Marginal Propensity to Consume = `"Change in consumption"/"Change in income"`
Symbolically,
MPC(c) = `(DeltaC)/(DeltaY)`
Where ΔC refers to change in total consumption and ΔY refers to change in income.
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