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Marginal Propensity to Consume Calculator

LAST UPDATE: August 29th, 2018

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What is the marginal propensity to consume?

MPC is the amount that consumption will increase (or decrease) for every increase (or decrease) in disposable income.

When income increases, those who benefit from it have a choice to either save or spend. If they spend (instead of save) 80% of their increase in income, their MPC would be 0.8 (and their MPS, marginal propensity to save, would be 0.2).

Formula

Marginal Propensity to Consume = Change in Consumption / Change in Income

Example

Change in consumption is $900 in the same period where change in income is $1,500.

MPC = $900 / $1,500 = 0.60

Therefore, Marginal Propensity to Consume is 0.60.

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