Given the equations for C,I,G,and NX below,what is the value of the marginal propensity to save? C = 1,000 + 0.8Y
I = 1,500
G =1,250
NX = 100
A)0.2
B)0.8
C)1.8
D)10

Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is defined as the change in savings resulting from a one-unit change in disposable income. It can be calculated as (1-MPC), where MPC is the marginal propensity to consume.

To find the MPC, we need to look at the consumption function C = 1,000 + 0.8Y. Here, the intercept is 1,000 and the slope is 0.8, which means that for every one-unit increase in disposable income (Y), consumption will increase by 0.8 units. Thus, MPC = 0.8.

Finally, MPS = 1 - MPC = 1 - 0.8 = 0.2. Therefore, the answer is A) 0.2.

Given the Equations for C,I,G,and NX Below,what Is the Value