Marginal Propensity to Consume

Finance

Calculate MPC (Marginal Propensity to Consume). Formula: MPC = ΔConsumption / ΔIncome. Shows what fraction of extra income consumers spend.

Formula

MPC = ΔConsumption / ΔIncome. MPS = 1 - MPC

Income +$1000B, Consumption +$700B

Inputs
  • Change in Consumption ($B): 700
  • Change in Income ($B): 1000

MPC = 0.7 (70% of extra income spent)

Frequently asked questions

MPC range?
0-1; typically 0.6-0.9 in developed economies
Economic impact?
Higher MPC = stronger multiplier effect from stimulus