The table below shows disposable income and desired consumption for a closed economy with no government.
TABLE 21-2
-Refer to Table 21-2.The marginal propensity to save is equal to
A)0.8.
B)0.67.
C)0.6.
D)0.4.
E)0.2.

Question

The table below shows disposable income and desired consumption for a closed economy with no government.
  TABLE 21-2
-Refer to Table 21-2.The marginal propensity to save is equal to
A)0.8. 
B)0.67. 
C)0.6. 
D)0.4. 
E)0.2.

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 0.8, then the MPS is 0.2.

The Table Below Shows Disposable Income and Desired Consumption for a Closed