If the marginal propensity to consume is 0.80, the marginal propensity to save is:
A)0.20.
B)0.15.
C)1.0.
D)1.18.

Name: If the marginal propensity to consume is 0.80, the marginal propensity to save is: A)0.20. B)0.15. C)1.0. D)1.18.
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Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) and the marginal propensity to save (MPS) always add up to 1. Therefore, if the MPC is 0.80, the MPS must be 0.20 (1 - 0.80 = 0.20). This means that for every additional unit of income, 80% will be spent and 20% will be saved.

If the Marginal Propensity to Consume Is 0