-In the above table, the marginal propensity to save when disposable income changes from $1,000 to $2,000 is
A)0.1.
B)0.2.
C)0.8.
D)-0.2.

Question

-In the above table, the marginal propensity to save when disposable income changes from $1,000 to $2,000 is
A)0.1. 
B)0.2. 
C)0.8. 
D)-0.2.

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is calculated as the change in savings divided by the change in disposable income. If disposable income increases from $1,000 to $2,000, and assuming savings increase accordingly, the MPS would be 0.2 if the savings increase by $200 (i.e., $200/$1,000).

-In the Above Table, the Marginal Propensity to Save When