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Marginal Propensity to Consume: Definition and Formula of the MPC

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What do you need to calculate in order to determine the marginal propensity to consume?

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1. As income rises from $50,000 to $60,000, consumption increases from $40,000 to $48,000. In this case, what is the MPC?

2. Assume that consumption spending is $16,000. For every $200 increase in disposable income, saving goes up by $20. Which of the following statements is true?

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About This Quiz & Worksheet

The Marginal Propensity to Consume, the MPC for short, describes the portion of extra income, income above and beyond what a consumer normally makes, that a consumer will probably spend. This quiz and worksheet combination will help you test your understanding of this concept. The quiz questions will test you on how to calculate the MPC, the properties of the MPC, and identifying the MPC/MPS given certain data.

Quiz & Worksheet Goals

In these assessments, you'll be tested on:

  • Defining the MPC
  • Calculating the MPC given certain data
  • Identifying the MPS given certain data

Skills Practiced

This quiz and worksheet will allow you to test your skills in the following areas:

  • Reading comprehension - ensure that you draw the most important information on the MPC from the related lesson
  • Problem solving - use your acquired knowledge to solve practice problems involving the calculation and identification of the MPC when given certain data, such as the amount of consumption spending and the ratio of money spent to money saved
  • Information recall - access the knowledge you've gained regarding the MPC

Additional Learning

You should also read the lesson called Marginal Propensity to Consume: Definition and Formula of the MPC. This lesson covers the following objectives:

  • Define and describe the concept of extra income
  • Define the Marginal Propensity to Consume
  • Define the Marginal Propensity to Save
  • Differentiate between these two concepts
  • Demonstrate your ability to calculate either the MPC or MPS
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