(Table) When disposable income increases from $1,000 to $1,200, what is the value of the marginal propensity to save? $$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Disposable } \
\text { Income }
\end{array} & \text { Consumption } \
\hline \$ 1,000 & \$ 1,200 \
\hline \$ 1,200 & \$ 1,300 \
\hline \$ 1,400 & \$ 1,400 \
\hline \$ 1,600 & \$ 1,500 \
\hline \$ 1,800 & \$ 1,600 \
\hline
\end{array}$$
A) 0.5
B) -0.5
C) 1.5
D) -1.5

Question

(Table) When disposable income increases from $1,000 to $1,200, what is the value of the marginal propensity to save? $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Disposable } \
\text { Income }
\end{array} & \text { Consumption } \
\hline \$ 1,000 & \$ 1,200 \
\hline \$ 1,200 & \$ 1,300 \
\hline \$ 1,400 & \$ 1,400 \
\hline \$ 1,600 & \$ 1,500 \
\hline \$ 1,800 & \$ 1,600 \
\hline
\end{array}$$
A) 0.5
B) -0.5
C) 1.5
D) -1.5

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is calculated as the change in savings divided by the change in income. Here, when income increases from $1,000 to $1,200, consumption increases from $1,200 to $1,300. The change in savings is $100 (since $200 income increase minus $100 consumption increase), so MPS = $100 / $200 = 0.5.

(Table) When Disposable Income Increases from $1,000 to $1,200, What