What is the marginal propensity to consume? Explain it in your own words. How do you think the value of MPC varies across households with different levels of income? Who has relatively higher or lower MPCs, people with high incomes or low incomes? Why? We have discussed the government’s use of fiscal policy to stimulate the economy. How might the government increase individuals' disposable income? Implications for policy: If the goal is to stimulate the economy and maximize the multiplier effect, how can knowing who is more likely to spend an extra dollar make fiscal policy more effective? Be sure to define the multiplier effect.