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MPC equals..?

MPC equals..?

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Answer #1

An individual earns income to live their living. He uses his income in two ways, such as consumption and savings. An individual’s income is the sum of consumption spending and savings

MPC refers to the marginal propensity to consume. It states the responsiveness of an individual’s consumption with the change in his income level. Therefore, MPC equals to consumption to income ratio. It is defined as:

Where, C is the consumption level.

And, Y is the income level.

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