The term marginal propensity to consume can best be explained as the

Assessment: WAEC SSCE - Economics - 1988 (Objective) Subject: Economics

Question 1 Report

The term marginal propensity to consume can best be explained as the
Answer Details
The marginal propensity to consume is the change in consumption as a percentage of change in income. In other words, it is the proportion of additional income that a person or household spends on consumption. For example, if a household's income increases by $100 and they spend $80 of it on consumption, then their marginal propensity to consume is 0.8 (80/100). This concept is important in macroeconomics because it helps to predict how changes in income will affect overall consumption and, therefore, the level of economic activity in a country.
Read lesson note on The Theory Of Demand (JAMB)
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