Suppose the economy's saving schedule shifts from S1 to S2, as shown in the given diagram. We can say that its
A) MPC has increased.
B) MPS has increased.
C) APS has increased at all levels of disposable income.
D) APS has decreased at all levels of disposable income.

Question

Suppose the economy's saving schedule shifts from S1 to S2, as shown in the given diagram. We can say that its
A) MPC has increased. 
B) MPS has increased. 
C) APS has increased at all levels of disposable income. 
D) APS has decreased at all levels of disposable income.

Quizplus · Accepted Answer

The saving schedule shifts to the right from S1 to S2, indicating that at each level of disposable income, individuals are saving more, or consuming less. This means that the MPS (marginal propensity to save) has increased.

Suppose the Economy's Saving Schedule Shifts from S1 to S2