Marginal propensity to consumer (MPC) is calculated using one of the following formulae ____________
A. \(\mathrm{MPC}=\frac{\text { Change in saving }}{\text { change in income }}\) B. \(\mathrm{MPC}=\frac{\text { Change in consumption }}{\text { Change in income }}\) C. \(M P C=\frac{1}{1-M P C}=\frac{1}{M P S}\) D. \(M P C=\frac{\text { Total savings }}{\text { Total incomes }}\)
Correct Answer: C
Explanation
\(M P C=\frac{\Delta Y}{\Delta C}=\frac{\text { Chnage in Income }}{\text { Change in Consumption }}\) \begin{array}{c} =\frac{1}{1-M P s} \\ \therefore C=a+b y \\ \frac{\Delta C}{\Delta Y}=b, \frac{\Delta Y}{\Delta C}=\frac{1}{b} \end{array}
