The marginal propensity to consume (MPC) refers to the proportion of additional income that consumers spend on goods and services, rather than saving or paying taxes. It measures how much each additional dollar of income is spent.
Related terms
Aggregate Consumption: It represents total spending by households on goods and services in an economy.
Disposable Income: It is the amount of money individuals have available to spend or save after taxes are paid.
Autonomous Consumption: The level of consumption that occurs even when there is no income, driven by factors like basic needs.