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Determination Of Income And Employment

Question

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Define marginal propensity to consume (MPC).

Solution

MPC refers to the proportion of additional income (AY) which is spent on additional consumption (AC). Symbolically : MPC = ΔC/ΔY.

Some More Questions From Determination of Income and Employment Chapter

What do you understand by aggregate demand (AD)?

Explain the meaning of aggregate supply (AS).

Calculate consumption level for Y = र 1000 crores if consumption function is C = 300 + 0.5Y.

State relationship between income and consumption.

What is Breakeven point?

What are the types of Propensity to consume?

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