MPC（Marginal Propensity to Consume）is an indicator that represents the change in consumption relative to the change in disposable income. It shows the variation in consumption when one unit of disposable income is increased or decreased. The concept of MPC is complementary to the concept of “Marginal Propensity to Save”. Since the sum of consumption propensity and saving propensity is equal to 1, the sum of MPC and MPS always equals 1. By analyzing the average consumption propensity, we can understand how disposable income is allocated between saving and consumption during different time periods. However, it cannot provide insights into the distribution of known changes in income between changes in consumption and changes in saving. On the other hand, MPC allows us to observe this distribution.
