Figure 13-1
-Refer to Figure 13-1. The marginal propensity to save is
A) 0.25.
B) 0.50.
C) 0.60.
D) cannot be determined without a savings function.

Question

Figure 13-1 
-Refer to Figure 13-1. The marginal propensity to save is
A) 0.25. 
B) 0.50. 
C) 0.60. 
D) cannot be determined without a savings function.

Quizplus · Accepted Answer

The formula for calculating the marginal propensity to save (MPS) is: change in savings / change in income. From the graph, we can see that a $200 increase in income results in a $100 increase in savings. Therefore, the MPS is 0.50.

Figure 13-1 -Refer to Figure 13-1. the Marginal Propensity to Save Is