In an economy with no taxes and no imports,disposable income increases from $1 000 to $2 000.If consumption increases from $800 to $1 500,the marginal propensity to save is 0.3.

Question

Quizplus · Accepted Answer

The formula for marginal propensity to save is: MPS = 1 - MPC, where MPC is the marginal propensity to consume. 
In this case, MPC = (1500-800)/(2000-1000) = 0.7. 
Therefore, MPS = 1 - 0.7 = 0.3, which is consistent with the given information. Therefore, the statement is true.

In an Economy with No Taxes and No Imports,disposable Income