Thursday, March 3, 2016

Unit III Marginal Propensity to Consume

-The fraction of any change in disposable income that is consumed.
-MPC = Change in Consumption / Change in Disposable Income
-MPC = Change in Savings / Change in Disposable Income

  • Marginal Propensities:

  • MPC + MPS = 1
  • MPC = 1 - MPC
  • MPS = 1 - MPC
  • Remember that people do two things with their disposable income, consume it or save it
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1 comment:

  1. Tommy T.March 3, 2016 at 7:37 PM

    MPS equals to change in savings divided by change in disposable income and MPC equals 1 minus MPS. Other than those mistakes, your blog covers just about everything in Unit 3 in an organized way.

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