Economics · Macroeconomics - Consumption Function
Which of the following statements concerning the Marginal Propensity to Consume (MPC) is NOT correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1In underdeveloped countries, the Marginal Propensity to Consume tends to be high, whereas in advanced countries it tends to be low.
- 2The Marginal Propensity to Consume is always positive but less than one.
- 3Marginal Propensity to Consume is defined as the total consumption per unit of total income.✓
- 4The Marginal Propensity to Consume is higher in the case of poor people than in that of rich people.
Correct answer
Marginal Propensity to Consume is defined as the total consumption per unit of total income.
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