Definition of Marginal Propensity to Consume

Marginal Propensity to Consume

Fraction of an increase in disposable income that is spent on consumption.

Average Propensity to Consume

Ratio of consumption to disposable income. See also marginal propensity to consume.

MPC

See marginal propensity to consume.

Consumer credit

Credit granted by a firm to consumers for the purchase of goods or services. Also called
retail credit.

Consumer Price Index (CPI)

The CPI, as it is called, measures the prices of consumer goods and services and is a
measure of the pace of U.S. inflation. The U.S.Department of Labor publishes the CPI very month.

Marginal

Incremental.

Marginal tax rate

The tax rate that would have to be paid on any additional dollars of taxable income earned.

Marginal cost

The cost of producing one extra unit.

Marginal cost

The incremental change in the unit cost of a product as a result of a
change in the volume of its production.

marginal tax rate

Additional taxes owed per dollar of additional income.

Average Propensity to Save

Ratio of saving to disposable income. See also marginal propensity to save.

Consumer Price Index (CPI)

An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation.

Marginal Propensity to Import

Fraction of an increase in disposable income that is spent on imports.

Marginal Propensity to Save

Fraction of an increase in disposable income that is saved.

Marginal Tax Rate

Percent of an increase in income paid in tax.

Consumer Credit Protection Act

A federal Act specifying the proportion of
total pay that may be garnished.

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