With an MPS of .4, the MPC will be:
A)1.0 minus .4.
B).4 minus 1.0.
C)the reciprocal of the MPS.
D).4.

Name: With an MPS of .4, the MPC will be: A)1.0 minus .4. B).4 minus 1.0. C)the reciprocal of the MPS. D).4.
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Question

Quizplus · Accepted Answer

The MPC is the change in consumption divided by the change in income. The MPS is the change in saving divided by the change in income. The MPC and MPS sum to 1. Therefore, the MPC is 1 minus the MPS.