Refer to the information provided in Figure 8.1 below to answer the questions that follow. Figure 8.1
-Refer to Figure 8.1. The ________ for this household is 0.5 and the ________ is also 0.5.
A) MPC; MPS
B) MPC; consumption function
C) MPS; saving function
D) consumption function; saving function

Question

Refer to the information provided in Figure 8.1 below to answer the questions that follow.  Figure 8.1
-Refer to Figure 8.1. The ________ for this household is 0.5 and the ________ is also 0.5.
A) MPC; MPS 
B) MPC; consumption function 
C) MPS; saving function 
D) consumption function; saving function

Quizplus · Accepted Answer

The MPC (marginal propensity to consume) measures the change in consumption due to a change in income, while the MPS (marginal propensity to save) measures the change in saving due to a change in income. In this case, both the MPC and MPS are 0.5, indicating that for every additional unit of income, half will be consumed and half will be saved.

Refer to the Information Provided in Figure 8