Marginal Propensity to Consume
Definition
Share of an extra dollar of income spent on consumption. Drives the Keynesian fiscal multiplier.
Example
If a household gets $1,000 and spends $750 of it, MPC = 0.75.
Share of an extra dollar of income spent on consumption. Drives the Keynesian fiscal multiplier.
If a household gets $1,000 and spends $750 of it, MPC = 0.75.