If the marginal propensity to consume is 0.8, the value of the marginal propensity to save is:
A) 5.
B) 0.8.
C) 1.25.
D) 0.2.

Name: If the marginal propensity to consume is 0.8, the value of the marginal propensity to save is: A) 5. B) 0.8. C) 1.25. D) 0.2.
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Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) + the marginal propensity to save (MPS) must equal 1, as all income must either be consumed or saved. Therefore, MPS = 1 - MPC = 1 - 0.8 = 0.2.

If the Marginal Propensity to Consume Is 0