Table 12-4

-Refer to Table 12-4.Given the data in the table above,the marginal propensity to save is
A)0.3.
B)0.4.
C)0.5.
D)0.6.

Question

Table 12-4
 
-Refer to Table 12-4.Given the data in the table above,the marginal propensity to save is
A)0.3. 
B)0.4. 
C)0.5. 
D)0.6.

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is calculated as the change in savings divided by the change in income. From the data, if income increases from $10,000 to $15,000, savings increase from $1,000 to $3,000. Thus, MPS = ($3,000 - $1,000) / ($15,000 - $10,000) = $2,000 / $5,000 = 0.4.

Table 12-4 -Refer to Table 12-4.Given the Data in the Table Above,the