$$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Possible Levels of Domestic Output and } \
\text { Income } ( G D P = D I )
\end{array} & \text { Consumption } \
\hline \$ 320 & \$ 320 \
\hline 330 & 327 \
\hline 340 & 334 \
\hline 350 & 341 \
\hline 360 & 348 \
\hline 370 & 355 \
\hline 380 & 362 \
\hline
\end{array}$$ The table gives data for a private closed economy. The MPS is
A) 7/10.
B) 3/10.
C) 2/5.
D) 3/5.

Question

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Possible Levels of Domestic Output and } \
\text { Income } ( G D P = D I )
\end{array} & \text { Consumption } \
\hline \$ 320 & \$ 320 \
\hline 330 & 327 \
\hline 340 & 334 \
\hline 350 & 341 \
\hline 360 & 348 \
\hline 370 & 355 \
\hline 380 & 362 \
\hline
\end{array}$$ The table gives data for a private closed economy. The MPS is
A) 7/10.
B) 3/10.
C) 2/5.
D) 3/5.

Quizplus · Accepted Answer

The Marginal Propensity to Save (MPS) is calculated as the change in saving divided by the change in income. From the table, as income increases from $320 to $330, consumption increases from $320 to $327, implying a saving increase of $3 ($10 increase in income - $7 increase in consumption). Therefore, MPS = $3/$10 = 3/10.

The Table Gives Data for a Private Closed Economy