-Refer to Exhibit 10-3.The marginal propensity to save (MPS)is
A) 0.
B) 0.10.
C) 0.20.
D) 0.25.
E) none of the above

Question

-Refer to Exhibit 10-3.The marginal propensity to save (MPS)is
A) 0. 
B) 0.10. 
C) 0.20. 
D) 0.25. 
E) none of the above

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is calculated as the change in saving divided by the change in income. If the change in income leads to a change in saving, the ratio of these changes gives the MPS. Without specific numbers from "Exhibit 10-3," we typically calculate MPS as 1 minus the marginal propensity to consume (MPC). If MPC is 0.8 (implied by the common economic principle that if one is not consuming, they are saving), then MPS = 1 - 0.8 = 0.20.