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Why current consumption is likely to respond less than one for one to changes in current...

Why current consumption is likely to respond less than one for one to changes in current income?

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Answer #1

it can be mentioned that when there is an increase in the current income you cannot send more than that because it cannot effort that and therefore there are only two options for it whether you can spend it or you can say where

MPC or marginal propensity to consume tells about how much you can actually increase your spending if there is an increase in income and MPS marginal propensity to save tells how much you can increase your your savings if there is an increase in your income where

MPC + MPS = 1

that is the reason why the marginal propensity to consume for the increase in the consumption with increase in the income is always less than or equal to 1

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