Consumption Function: Relationship Between Marginal & Average Propensity to Consume


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_____ argued that consumption was largely a function of income level.

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1. Assume that a state's aggregate household income is 10 billion dollars with consumption of 9.6 billion dollars. What is the average propensity to consume?

2. James has a marginal propensity to consume of 0.75. What does this mean?

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About This Quiz & Worksheet

A series of questions is going to challenge you on subjects like income level, average propensity and marginal propensity.

Quiz & Worksheet Goals

If you take this quiz, you'll be asked particularly about:

  • Who argued that consumption was a function of income level
  • The calculation of average propensity
  • What marginal propensity is and how it's calculated
  • Determinants of an economy's consumption level

Skills Practiced

  • Information recall - access the knowledge you've gained regarding the calculation of different types of propensity
  • Reading comprehension - ensure that you draw the most important information from the related consumption function lesson
  • Interpreting information - verify that you can read information regarding the outlook of a famous economist and interpret it correctly

Additional Learning

Tighten your grip on consumption function with the assistance of our lesson named Consumption Function: Relationship Between Marginal & Average Propensity to Consume. This lesson's job is to cover:

  • Average propensity to consume (APC)
  • Marginal propensity to consume (MPC)
  • Graphing the MPC
  • Different levels of MPC