A high marginal propensity to consume implies which of the following?

• A. Individuals save most of any additional income.
• B. Individuals are less responsive to changes in income.
• C. Consumption decreases as income increases.
• D. Individuals spend a large portion of any additional income on consumption.

Answer: (D)

Verified step by step guidance

1. Understand the concept of the marginal propensity to consume (MPC), which measures the fraction of additional income that an individual spends on consumption rather than saving.
2. Recall that MPC is defined as the change in consumption (\(\Delta C\)) divided by the change in income (\(\Delta Y\)), expressed as \(MPC = \frac{\Delta C}{\Delta Y}\).
3. Recognize that a high MPC means individuals spend a large portion of any additional income they receive, rather than saving it.
4. Analyze the given options by comparing them to the definition of MPC: if MPC is high, individuals do not save most of the additional income, so the first option is incorrect.
5. Conclude that the correct interpretation is that individuals with a high MPC spend a large portion of any additional income on consumption, making the last option the correct choice.