If a household experiences a $880 increase in consumption with a $1, 100 increase in disposable income, what is the slope of that household's saving function?
A)0.20
B)2.0
C)0.80
D)0.08
E)0.25

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is 880/1100 = 0.80. The marginal propensity to save (MPS) is 1 - MPC = 0.20, which is the slope of the saving function.

If a Household Experiences a $880 Increase in Consumption with a $1