Although, of course, the result is an income loss for oil producers, the marginal propensity to consume of consumers (as it were) is higher and this helps demand.
The sum of the propensity to consume and the propensity to save always equals one (see propensity to consume).
My world then was studying The Marginal Propensity to Consume, Middlemarch and The Beer Hall Putsch.
For many economists, the marginal propensity to consume is considered the more significant concept.
"The preliminary evidence suggests that the marginal propensity to consume is about the same this time," he said.
The ratio of total consumption to total income is known as the average propensity to consume; an increase in consumption caused by an addition to income divided by that increase in income is known as the marginal propensity to consume.
Inevitably, this will have a bigger impact on consumption since the poor have a higher marginal propensity to consume.
Buy from Amazon.com, Amazon.co.ukWHEN economists debate austerity, they use arcane phrases like "fiscal multipliers" and "marginal propensity to consume".
None of them say that a high marginal propensity to consume might be a way to create sustained economic growth.
The cuts in benefits will fall on those individuals who have a high marginal propensity to consume.
The theory is simple enough and has its roots in basic microeconomics, specifically the decline in the marginal propensity to consume as incomes rise.
