Table 23-3

-Refer to Table 23-3. Given the consumption schedule in the table above, the marginal propensity to save is
A) 0.1.
B) 0.4.
C) 0.7.
D) 0.9.

Question

Table 23-3
 
-Refer to Table 23-3. Given the consumption schedule in the table above, the marginal propensity to save is
A) 0.1. 
B) 0.4. 
C) 0.7. 
D) 0.9.

Quizplus · Accepted Answer

The marginal propensity to save is the change in saving divided by the change in income. From the table, we can see that when income increases from $100 to $200, saving increases from $10 to $40. Therefore, the marginal propensity to save is ($40 - $10) / ($200 - $100) = 0.3.

Table 23-3 -Refer to Table 23-3. Given the Consumption Schedule in the Consumption