Suppose that when disposable income rises from $5.2 trillion to $6.0 trillion,consumption rises from $5.0 trillion to $5.6 trillion.What is the marginal propensity to save?
A)0.25
B)0.33
C)0.75
D)0.67
E)0.07

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income, which is (5.6 - 5.0) / (6.0 - 5.2) = 0.75. The marginal propensity to save (MPS) is 1 - MPC, so MPS = 1 - 0.75 = 0.25.

Suppose That When Disposable Income Rises from $5