*noun*; in Keynesian economics, the rate at which aggregate consumption rises in response to a rise in national income.
For example, suppose the marginal propensity to consume (MPC) is 0.95. If the national income is 100 billion dollars, and it rises 10%, then consumption will rise by 9.5 billion, and saving will rise by 0.5 billion.
If this theory is correct, then an expanding economy will suffer insufficient demand for its own output, and a recession will be inevitable.
This is why national governments respond to recessions with deficit spending: they are trying to counteract the MPC's effect on aggregate demand, and bring it in line with potential output.
For example, suppose the marginal propensity to consume (MPC) is 0.95. If the national income is 100 billion dollars, and it rises 10%, then consumption will rise by 9.5 billion, and saving will rise by 0.5 billion.
If this theory is correct, then an expanding economy will suffer insufficient demand for its own output, and a recession will be inevitable.
This is why national governments respond to recessions with deficit spending: they are trying to counteract the MPC's effect on aggregate demand, and bring it in line with potential output.
Not only is the marginal propensity to consume weaker in a wealthy community, but, owing to its accumulation of capital being already larger, the opportunities for further investment are less attractive...
J.M. Keynes, *The General Theory of Employment, Interest, and Money* (1936), Ch.3
J.M. Keynes, *The General Theory of Employment, Interest, and Money* (1936), Ch.3
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Mergina • Merina • Marginal • Mercina • Merlina • merrinati • Mesgina • Marginalia • marginalize • marginalized
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Get the Mercina mug.phenomenon in which greater input of effort, money, etc. yields smaller results. Crucial part of the idea is that if you're using x to get y results (where y is the thing you want). then additional input a will yield additional results b, but not in the same proportion as before.
On average, before, you put in x to get y, so your yield was y/x. But if you increase x by amount a, then your results will be y + b, where
(y + b)/(x + a) < y/x
and this will only get worse.
Diminishing marginal returns (DMR) is used to explain why the supply curve in economics slopes upward, i.e., increasing the quantity supplied requires an increased price of most things.
Sometimes DMR is more than offset by "economies of scale," which allows more of a thing to be supplied more cheaply than a small amount.
On average, before, you put in x to get y, so your yield was y/x. But if you increase x by amount a, then your results will be y + b, where
(y + b)/(x + a) < y/x
and this will only get worse.
Diminishing marginal returns (DMR) is used to explain why the supply curve in economics slopes upward, i.e., increasing the quantity supplied requires an increased price of most things.
Sometimes DMR is more than offset by "economies of scale," which allows more of a thing to be supplied more cheaply than a small amount.
At first his flowers and treats swept her off her feet, but then he had to do more and more lavish things to please her. It was a classic case of diminishing marginal returns.
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1. If you're a RACIST--regardless of YOUR color--you marginalize people on the basis of THEIR color.
2. "Let's marginalize Sarah--make her look like a stupid hick--that'll take her down a peg or two!"
2. "Let's marginalize Sarah--make her look like a stupid hick--that'll take her down a peg or two!"
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