Re: Estimating the surplus\Doug's question

[Doug Henwood <dhenwood@xxxxxxxxx>]

Mike Ballard wrote:

> --- Doug Henwood <dhenwood@xxxxxxxxx> wrote:
> The MPC was something like 104%
> >  measured over the whole cycle. It's been something
> >  like 99% since the early-2001 peak.
>
> What does MPC stand for?

Marginal propensity to consume. The percentage of growth in income
which is consumed. For example if your income in year 1 was 10,000
and your consumption 9,000, and in year 2 it was 11,000 and
consumption 10,200, your MPC would be computed as:

income growth: 11,000-10,000 = 1,000
consumption growth: 10,200-9,000 = 1,200
MPC = 1,200/1,000 = 1.2 or 120%.

Doug