Question

Which formula correctly defines Marginal Propensity to Consume (MPC)?

Options

• \[APS=\frac{S}{Y}\]

• \[MPS=s=\frac{\Delta S}{\Delta Y}\]

• \[MPC=c=\frac{\Delta C}{\Delta Y}\]

• \[APC=\frac{C}{Y}\]

Answer 1

MPC is the change in consumption due to a unit change in income. Thus, it is measured as \[\frac{\Delta C}{\Delta Y}\].