MPC Full Form in Economics – Check The Full Form and Learn about MPC Here!

MPC Full form: Economics is a very important subject in many competitive exams. It may seem to be a very difficult subject to grasp, but it’s just a matter of right guidance and regular practice that helps the candidates get an edge over this subject. The syllabus for this subject may vary depending on the exam you are appearing for. However, understanding the concepts and full forms remains to be constant in all the preparations! Hence in this article, we provide you with the MPC full form in Economics. You will not only get to know the full form but also understand this concept!

MPC Full Form in Economics: Learn about this Concept

MPC stands for Marginal propensity to consume. It refers to the proportion of extra income that a person spends instead of saves. The famed British economist John Maynard Keynes coined the term MPC and its formula in the 1930s during the Great Depression. He observed that the individuals have the propensity to consume more when their income increases. MPC is an important concept in economics because it relates to how a government stimulus might affect the economy.

Let us understand the formula to calculate the same –

MPC = ∆C/∆Y

Where

∆C – Change in consumption

∆Y – Change in Income

MPC plays a key role in the Keynesian macroeconomic theory, where it is a key variable in showing the multiplier effect of economic stimulus spending.

Key Takeaways

We hope that our article was informative and useful. Learning the basics of economics is easier than you think, especially when you have the right guidance with you.

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MPC Full Form In Economics – FAQs