For example, when an individual's income increases, other things remaining the same, that person will demand more goods and services; thus increasing their consumption. The degree to which a person or economy will spend more of their income on consumption is called the marginal propensity to consume (MPC). The MPC depends on the individual's or economy's saving characteristics.
Investment dictionary. Academic. 2012.
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income effect — ➔ effect1 * * * income effect UK US noun [C] ► ECONOMICS the effect of changes in things such as prices, taxes, and costs of services on people s incomes: »The higher the proportion of borrowing that is at variable interest rates, the bigger the… … Financial and business terms
income effect — / ɪnkʌm ɪˌfekt/ noun the effect that a change in a person’s income has on his or her spending … Marketing dictionary in english
income tax — a tax levied on incomes, esp. an annual government tax on personal incomes. [1790 1800] * * * Levy imposed by public authority on the incomes of persons or corporations within its jurisdiction. In nations with an advanced system of private… … Universalium
effect — ▪ I. effect ef‧fect 1 [ɪˈfekt] noun 1. [countable, uncountable] the way in which an action, event, or person changes someone or something: • Inflation is having a disastrous effect on the economy. demonˈstration efˌfect [singular] … Financial and business terms
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