If the marginal propensity to consume is 0.8, the marginal propensity to save is 8.

Name: If the marginal propensity to consume is 0.8, the marginal propensity to save is 8.
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Quizplus · Accepted Answer

The sum of marginal propensity to consume and marginal propensity to save should always equal to 1, as they are the only two possible uses of income (either spent or saved). In this case, if the marginal propensity to consume is 0.8, then the marginal propensity to save would be 0.2 (1-0.8). Therefore, the statement is false.

If the Marginal Propensity to Consume Is 0