$$\begin{array}{l}
\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Disposable Income } \
\text { (Billions of dollars per year) }
\end{array} & \begin{array} { c }
\text { Total Consumption } \
\text { (Billions of dollars per year) }
\end{array} \
\hline \$ 0 & \$ 50 \
\hline 200 & 210 \
\hline
\end{array}\
\text { Table } 9.1
\end{array}$$ What is the rate of saving when income equals $300 billion in Table 9.1?
A)Zero.
B)$50 billion.
C)$10 billion.
D)-$290 billion.

Question

$$\begin{array}{l}
\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Disposable Income } \
\text { (Billions of dollars per year) }
\end{array} & \begin{array} { c } 
\text { Total Consumption } \
\text { (Billions of dollars per year) }
\end{array} \
\hline \$ 0 & \$ 50 \
\hline 200 & 210 \
\hline
\end{array}\
\text { Table } 9.1
\end{array}$$ What is the rate of saving when income equals $300 billion in Table 9.1?
A)Zero.
B)$50 billion.
C)$10 billion.
D)-$290 billion.

Quizplus · Accepted Answer

When income is $300 billion, consumption can be extrapolated using the given data. The marginal propensity to consume (MPC) is calculated as (210-50)/(200-0) = 0.8. Thus, consumption at $300 billion income is $50 + 0.8 * 300 = $290 billion. Therefore, saving is $300 - $290 = $10 billion.

What Is the Rate of Saving When Income Equals $300