Suppose a family's annual disposable income is $8,000 of which it saves $2,000.(a) What is their APC?
(b) If their income rises to $10,000 and they plan to save $2,800, what are their MPS and MPC?
(c) Did the family's APC rise or fall with their increase in income?

Question

Quizplus · Accepted Answer

The Answer is (a) APC = .75 ($6,000/$8,000).
(b) MPS = .4 ($800/$2,000); MPC = .6 (1 - .4).
(c) APC fell to.72 ($7,200/$10,000).

Suppose a Family's Annual Disposable Income Is $8,000 of Which