-Refer to the above figure. The marginal propensity to consume and the marginal propensity to save
A) are 0.90 and 0.10, respectively.
B) are 0.83 and 0.17, respectively.
C) are 0.75 and 0.25, respectively.
D) depend on the level of income.

Question

-Refer to the above figure. The marginal propensity to consume and the marginal propensity to save
A) are 0.90 and 0.10, respectively. 
B) are 0.83 and 0.17, respectively. 
C) are 0.75 and 0.25, respectively. 
D) depend on the level of income.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income. The marginal propensity to save (MPS) is the change in saving divided by the change in income. In this case, the MPC is 0.83 and the MPS is 0.17.

-Refer to the Above Figure