Question

In the past, how has your consumption changed as the amount of your income increased and decreased over the years? How do you supplement for periods of low-income (for example if you are not working while you are in college)? Finally, compare your MPC now to what you think your MPC would be once you graduate and get a high-paying job. Do you think it will remain constant, increase, or decrease? Why?

Answer 1

I am a 60 year old man.

In the past, my consumption has changed drastically as my income has increased. This is because earlier when I had small kids and growing teens, my expenses or consumption was very high and held a high percentage of my income. However, now as the kids have grown up and moved out, my income is hardly spent and thus the consumption proportion of income has fell drastically.

Periods of low income is supplemented through savings from the past periods.

My MPC now is lower than when I had just graduated and got a high paying job, as then my expenses grew drastically as my income increased, but now they have reduced and become more or less stable.