The Marginal Propensity to Consume reflects the share of additional income that an individual spends. If a person earned $1 more in income and spent 85 additional cents, his MPC would be 0.85.
Most economic models assume, and some empirical studies confirm, that low-income Americans tend to have higher marginal propensities to consume than do high-income Americans. If this is the case, additional income that lands in the pockets of lower income people will raise demand more than the same rise in the income of the affluent.
Related Terms: Multiplier