If consumers save $0.13 out of each additional dollar of disposable income,the marginal propensity to consume is 1.3.

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The marginal propensity to consume (MPC) is defined as the fraction of additional income that is spent on consumption. It is calculated as MPC = change in consumption / change in disposable income. Therefore, if consumers save $0.13 out of each additional dollar of disposable income, the MPC is 0.87 (i.e. they spend $0.87 out of each additional dollar). The sum of MPC and marginal propensity to save (MPS) is always equal to 1, so MPS in this case would be 0.13.

If Consumers Save $0