Marginal propensity consume: How is it calculated? Marginal propensity to consume may be defined as ratio of the change in consumption to the change in income as the rate of change in the average propensity to consume as income changes.
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What is the difference between the average propensity and marginal propensity to consume? Propensity to consume or consumption function expresses the function relationship between total consumption and total income.
Keynes' psychological law of propensity to consume explained.Consumption function or propensity to consume represents functional relationship between two aggregate i.e. total Consumption and total income. It indicates how consumption expenditure.
8 essential factors that determines propensity to consume. Income is the most important factor which determines the consumption expenditure in a society. The greater the level of disposable income, the higher is the consumption.