-Refer to the table in the exhibit.What does the marginal propensity to save (MPS) equal?
A) 0.80, or 4/5
B) 0.60, or 3/5
C) 0.40, or 2/5
D) 0.20, or 1/5

Question

-Refer to the table in the exhibit.What does the marginal propensity to save (MPS) equal?  
A) 0.80, or 4/5 
B) 0.60, or 3/5 
C) 0.40, or 2/5 
D) 0.20, or 1/5

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is calculated as the change in savings divided by the change in income. If the marginal propensity to consume (MPC) is 0.80 (or 4/5), then the MPS is 1 - MPC = 1 - 0.80 = 0.20, or 1/5, because the sum of MPC and MPS must equal 1.

-Refer to the Table in the Exhibit