Comments on: Marginal Propensity to Consume and Your Rebate Checks

By: GS

GS — Fri, 30 Jan 2009 19:24:14 +0000

“Essentially it is how much of every discretionary dollar you will go out and spend. If I gave you $100 and you would normally spend $95 of it, your mpc is 0.95. So mpc is on a scale of 0 to 1.”

Question: What would the mpc look like for the rich and the poor?

By: Jude Bayham

Jude Bayham — Mon, 22 Sep 2008 23:08:27 +0000

I too am a master’s student in economics and I appreciate the disclaimer at the beginning… but, very well described in layman’s terms. To elaborate on Sim Kaur’s point… spending more than your income is not possible. If you are referring to credit… this is considered an income advance, just like saving is postponed consumption…

By: ReneMar

ReneMar — Tue, 17 Jun 2008 14:54:20 +0000

Hello Kevin,
You have a very informative post.
If the MPC is very high meaning Americans are spending higher the they earn. So the lower the MPC the better. Is there anyway that the MPC will become lower?
[link removed]

By: Sim Kaur

Sim Kaur — Fri, 09 May 2008 19:53:18 +0000

….technically ..the value of MPC ranges from zero to one and the because what we are talking is a change in spending with the change in income ..it can never get above 1

By: JB

JB — Thu, 01 May 2008 13:27:34 +0000

I have the same question as Jonathan. If we have a negative savings rate wouldn’t the mpc be over 1?

By: MyMoneyAdventure

MyMoneyAdventure — Tue, 29 Apr 2008 20:09:16 +0000

This story is great, do you mind if I post it on my blog stating it from you?

Thanks!

By: Jonathan

Jonathan — Tue, 29 Apr 2008 15:47:03 +0000

Hey Kevin, really interesting post.

Is it possible that America could actually have an mpc of OVER 1, after taking into consideration the massive levels of consumer debt (and as you say, the negative savings rate)?