Question

Definition: The term Point (2 words) refers to the level of disposable income at which

consumers spend all of their income rather than saving any of it.

Answer 1

The term is Marginal Propensity to Consume.

Step-by-step explanation:

Marginal propensity to consume refers to the extra consumption people engage in, in proportion to the extra amount of disposable income that they recieve. In other words, it is the rate at which they consume their disposable income rather than save it.

For example, if I obtain extra $10 of disposable income, and consume (spend) $8, and save the remaining $2, my marginal propensity to consume is 0.2 or 20%.