If the consumption function is defined as C = 7,250 + 0.8Y,what is the marginal propensity to save?
A)0.2
B)0.8
C)5.8
D)9.1

Name: If the consumption function is defined as C = 7,250 + 0.8Y,what is the marginal propensity to save? A)0.2 B)0.8 C)5.8 D)9.1
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Question

Quizplus · Accepted Answer

The marginal propensity to save is the change in saving divided by the change in income. In this case, the change in saving is 0.2Y and the change in income is Y. Therefore, the marginal propensity to save is 0.2.

If the Consumption Function Is Defined as C = 7,250