Exhibit 10-2

-The marginal propensity to save (MPS) in Exhibit 10-2 equals
A)0.80 or 4/5
B)0.60 or 3/5
C)0.40 or 2/5
D)0.10 or 1/10
E)0.20 or 1/5

Question

Exhibit 10-2
 
-The marginal propensity to save (MPS) in Exhibit 10-2 equals
A)0.80 or 4/5 
B)0.60 or 3/5 
C)0.40 or 2/5 
D)0.10 or 1/10 
E)0.20 or 1/5

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is the fraction of additional income that is saved. If the marginal propensity to consume (MPC) is not given, we can assume that MPS is 1 minus MPC. In this case, the MPS is 0.20 or 1/5.

Exhibit 10-2 -The Marginal Propensity to Save (MPS) in Exhibit 10-2 Equals