When at a particular price level, aggregate demand for final goods equal aggregate supply of final goods, the final goods or product in market reaches it equilibrium. Aggregate demand for final goods consist of ex-ante consumption, ex-ante investment, government spending etc. The rate of increase in ex-ante consumption due to a unit increase in income is called marginal propensity to consume.

MPC stands for.

Marginal Propensity to Consume

The correct answer is option (2) : Marginal Propensity to Consume

MPC represents the proportion of an additional unit of income that a consume will spend on goods and services, rather than saving. Mathematically, it is expressed as the change in consumption divided by the change in income. For example, if MPC is 0.8, it indicates that 80% of additional income will be spent on consumption.