Question: The marginal propensity to consume (MPC) is 0.75 The multiplier is (Round your answer to one decimal place.)

What does an MPC of 0.8 mean?

MPC is the money people spend when they get an extra dollar of income. When MPC = 0.8, for example, when people gets an extra dollar of income, they spend 80 cents of it. … As MPC = 0.8, A will spend 80 cents of this extra income on something is wants to consume.

What determines MPC?

Marginal propensity to consume is equal to the change in consumption divided by the change in income.