MPC Calculator - Marginal Propensity to Consume

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Choose MPC mode to solve for the marginal propensity to consume, or Consumption Function mode to project spending at a given income level using a known MPC.
The increase (or decrease) in after-tax income over the period.
USD
The increase (or decrease) in spending on goods and services over the same period.
USD
Baseline consumer spending that occurs even when disposable income is zero (e.g. essentials funded by savings or credit).
USD
Current after-tax income used to project total consumer spending via the consumption function.
USD
Marginal Propensity to ConsumeHigh MPC
0.8

Fraction of each additional dollar of income that is spent on consumption.

Marginal Propensity to Save0.2
Spending multiplier5
Projected consumer spending24,500USD
Projected savings5,500USD
Average Propensity to Consume0.8167
Marginal Propensity to Consume0.8
Marginal Propensity to Save0.2

MPC is 0.8000: 80.0% of new income is spent, 20.0% is saved.

  • For every additional $1 of disposable income, $0.80 is spent on consumption and $0.20 is saved.
  • A spending multiplier of 5.00 means that $1 of new government or autonomous spending eventually generates $5.00 of total economic output as it cycles through the economy.
  • At a disposable income of $30,000, projected consumer spending is $24500, giving an Average Propensity to Consume of 81.7%.

Next stepUse the consumption function projection to explore how changes in income or autonomous spending shift total consumer expenditure.

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