Table 9.2

-Refer to Table 9.2, which shows the values of different components of aggregate expenditure of an economy. The marginal propensity to save (MPS) equals _____
A) 0.80 or 4/5.
B) 0.60 or 3/5.
C) 0.40 or 2/5.
D) 0.10 or 1/10.
E) 0.20 or 1/5.

Question

Table 9.2
 
-Refer to Table 9.2, which shows the values of different components of aggregate expenditure of an economy. The marginal propensity to save (MPS) equals _____
A) 0.80 or 4/5. 
B) 0.60 or 3/5. 
C) 0.40 or 2/5. 
D) 0.10 or 1/10. 
E) 0.20 or 1/5.

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is the fraction of additional income that is saved. It is calculated as 1 minus the marginal propensity to consume (MPC). If the MPC is 0.80, then MPS is 0.20 or 1/5.

Table 9.2 -Refer to Table 9.2, Which Shows the Values of Different