Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

MPC is the slope of which of the following options?

Options:

Saving function

Consumption function

Investment function

Cost function

Correct Answer:

Consumption function

Explanation:

Marginal propensity to consume refers to the ratio between change in consumption to change in income.

MPC = \(\frac{ ΔC}{ΔY}\)

C = c + bY, where b denotes the MPC