Marginal Propensity to Consume Calculator


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).


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


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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