Question

Write down the main features of Marginal propensity to consume.

Answer 1

The main features of Marginal propensity to consume (MPC) are:

1. MPC is always positive.
2. MPC of the poor class is higher.
3. Generally, MPC is greater than zero and less than unity (0 < MPC < 1).
4. MPC can be constant.
5. MPC tends to fall as income increases.
6. MPC can be greater than unity in abnormal conditions.