If income increases by $100 and the MPS is 1/4,then the additional amount saved equals
A)$50
B)$75
C)$25
D)$100
E)$33.33

Name: If income increases by $100 and the MPS is 1/4,then the additional amount saved equals A)$50 B)$75 C)$25 D)$100 E)$33.33
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Question

Quizplus · Accepted Answer

The MPS (Marginal Propensity to Save) is the fraction of an increase in income that is saved. So if income increases by $100, the additional amount saved would be:

MPS x increase in income
1/4 x $100 = $25

Therefore, the correct answer is (C) $25.

If Income Increases by $100 and the MPS Is 1/4,then