Table 8.3
-Refer to Table 8.3.Given the consumption schedule in the table above, the marginal propensity to save is
A)0.1.
B)0.4.
C)0.7.
D)0.9.
E)1.0.

Question

Table 8.3 
-Refer to Table 8.3.Given the consumption schedule in the table above, the marginal propensity to save is
A)0.1. 
B)0.4. 
C)0.7. 
D)0.9. 
E)1.0.

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is the fraction of an additional dollar of disposable income that is saved. It is the complement of the marginal propensity to consume (MPC). If the MPC is 0.9 (as implied by a consistent increase in consumption with increases in income), then the MPS is 1 - 0.9 = 0.1.

Table 8.3 -Refer to Table 8.3.Given the Consumption Schedule in the Table