marginal propensity to consume

(redirected from Propensity-to-Consume)

Marginal Propensity to Consume

In Keynesian economics, the amount of a person's increase in income spent on goods and services as opposed to saved. It is measured as a ratio of a change in consumption to a change in income. For example, if one receives a $5,000 raise in salary and spends $3,000, the MPC is 0.6. Factors affecting the MPC include interest rates and the relative expense of goods and services. See also: Marginal propensity to save.

marginal propensity to consume (MPC)

the fraction of any change in NATIONAL INCOME that is spent on consumption:

can be expressed as a proportion of the change in DISPOSABLE INCOME. See CONSUMPTION EXPENDITURE, PROPENSITY TO CONSUME, MULTIPLIER.