$$\begin{array} { c c c }
\hline \begin{array} { c }
\text { Real } \
\text { GDP } \
( \$ )
\end{array} & \begin{array} { c }
\text { Consumption } \
( \$ )
\end{array} & \begin{array} { c }
\text { Planned } \
\text { investment } \
( \$ )
\end{array} \
\hline 0 & 140 & 100 \
100 & 220 & 100 \
200 & 300 & 100 \
300 & 380 & 100 \
400 & 460 & 100 \
500 & 540 & 100 \
600 & 620 & 100 \
700 & 700 & 100 \
800 & 780 & 100 \
900 & 860 & 100 \
1,000 & 940 & 100 \
1,100 & 1,020 & 100 \
1,200 & 1,100 & 100 \
1,300 & 1,180 & 100 \
\hline
\end{array}$$
-Refer to the table in the exhibit.What is the MPS in the economy represented?
A) 0
B) 0.1
C) 0.2
D) 0.8

Question

$$\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Real } \
\text { GDP } \
( \$ )
\end{array} & \begin{array} { c } 
\text { Consumption } \
( \$ )
\end{array} & \begin{array} { c } 
\text { Planned } \
\text { investment } \
( \$ )
\end{array} \
\hline 0 & 140 & 100 \
100 & 220 & 100 \
200 & 300 & 100 \
300 & 380 & 100 \
400 & 460 & 100 \
500 & 540 & 100 \
600 & 620 & 100 \
700 & 700 & 100 \
800 & 780 & 100 \
900 & 860 & 100 \
1,000 & 940 & 100 \
1,100 & 1,020 & 100 \
1,200 & 1,100 & 100 \
1,300 & 1,180 & 100 \
\hline
\end{array}$$
-Refer to the table in the exhibit.What is the MPS in the economy represented?  
A) 0 
B) 0.1 
C) 0.2 
D) 0.8

Quizplus · Accepted Answer

The Marginal Propensity to Save (MPS) is calculated as the change in saving divided by the change in income. From the table, as Real GDP increases by $100 (from any level to the next), Consumption increases by $80. This means that the remaining $20 (i.e., $100 - $80) is not consumed and therefore saved. Thus, MPS = $20 / $100 = 0.2.

-Refer to the Table in the Exhibit