If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the marginal propensity to save?
A)0.2
B)0.8
C)5.8
D)9.1

Name: If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the marginal propensity to save? A)0.2 B)0.8 C)5.8 D)9.1
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Quizplus · Accepted Answer

The marginal propensity to save (MPS) is the complement of the marginal propensity to consume (MPC). Given the consumption function C = 7,250 + 0.8Y, the MPC is 0.8. Therefore, MPS = 1 - MPC = 1 - 0.8 = 0.2.

If the Consumption Function Is Defined as C = 7,250