Table 11.1

-Refer to Table 11.1. What is the value of the marginal propensity to save?

Question

Table 11.1
 
-Refer to Table 11.1. What is the value of the marginal propensity to save?

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is the fraction of each additional dollar of disposable income that is saved. In this table, we can see that as disposable income increases from $2000 to $3000, consumption increases from $2500 to $3500. Therefore, the change in consumption is $1000 and the change in disposable income is $1000, so the MPS is ($1000/$1000) = 0.25.

Table 11.1 -Refer to Table 11.1. What Is the Value of the the Value