Refer to the information provided in Figure 23.1 below to answer the question(s) that follow. Figure 23.1
-Refer to Figure 23.1. The ________ for this household is 0.5 and the ________ is also 0.5.
A) MPC; MPS
B) MPC; consumption function
C) MPS; saving function
D) consumption function; saving function

Question

Refer to the information provided in Figure 23.1 below to answer the question(s) that follow.  Figure 23.1
-Refer to Figure 23.1. The ________ for this household is 0.5 and the ________ is also 0.5.
A) MPC; MPS 
B) MPC; consumption function 
C) MPS; saving function 
D) consumption function; saving function

Quizplus · Accepted Answer

The MPC (marginal propensity to consume) is calculated by dividing the change in consumption by the change in income. In this case, the change in consumption is $250 and the change in income is $500, resulting in an MPC of 0.5. Similarly, the MPS (marginal propensity to save) is calculated by dividing the change in saving by the change in income. In this case, the change in saving is also $250 and the change in income is $500, resulting in an MPS of 0.5. Therefore, the correct answer is A.

Refer to the Information Provided in Figure 23