If the consumption function is of the form [C = 60 + 0.9Y], the MPS equals
A) -0.9.
B) 0.1.
C) 0.6.
D) 0.9.

Name: If the consumption function is of the form [C = 60 + 0.9Y], the MPS equals A) -0.9. B) 0.1. C) 0.6. D) 0.9.
Brand: Quizplus
Rating: 4.8 (30 reviews)

Question

Quizplus · Accepted Answer

The consumption function is in the form C = a + bY, where a is autonomous consumption and b is the marginal propensity to consume (MPC). The MPC + MPS = 1, so in this case, MPS = 1 - 0.9 = 0.1.

If the Consumption Function Is of the Form [C =