Refer to the information provided in Table 9.3 below to answer the questions that follow.
Table 9.3
All Numbers are in $ Million

-Refer to Table 9.3.Assuming constant MPC,at income of $1,200 million,saving is $________ million,at income of $1,600 million,saving is $________ million.

Question

Refer to the information provided in Table 9.3 below to answer the questions that follow.
Table 9.3
All Numbers are in $ Million
 
-Refer to Table 9.3.Assuming constant MPC,at income of $1,200 million,saving is $________ million,at income of $1,600 million,saving is $________ million.

Quizplus · Accepted Answer

The MPC (marginal propensity to consume) is the change in consumption divided by the change in income. Assuming a constant MPC of 0.8, the MPS (marginal propensity to save) is 0.2.

At an income of $1,200 million, consumption would be $960 million (0.8 x $1,200 million) and saving would be $240 million (0.2 x $1,200 million).

At an income of $1,600 million, consumption would be $1,280 million (0.8 x $1,600 million) and saving would be $320 million (0.2 x $1,600 million).

Therefore, the correct answer is B: 160 and 240.

Refer to the Information Provided in Table 9