Variation in Marginal Propensity to Consume (MPC) Across Households
The aggregate marginal propensity to consume (MPC) represents an average for the entire economy and can mask significant differences in spending behavior among households. The MPC is not uniform across all groups; it varies, particularly with wealth. For instance, low-wealth households tend to have a high MPC (e.g., 0.8 or more), as their consumption is closely tied to their income. In contrast, wealthy households typically have a much lower MPC, approaching zero, as their consumption is less affected by changes in current income.
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Ch.3 Aggregate demand and the multiplier model - The Economy 2.0 Macroeconomics @ CORE Econ
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