How much is the marginal propensity to save when disposable income rises from $3 trillion to $4 trillion?

A) 0
B) .25
C) .5
D) .75
E) 1.0

Question

How much is the marginal propensity to save when disposable income rises from $3 trillion to $4 trillion?A) 0B) .25C) .5D) .75E) 1.0

Anusan Shanmuganathan · Accepted Answer

Final Answer : C, Explanation :  The marginal propensity to consume (MPC) is 0.5, as consumption increases by $0.5 trillion when income increases by $1 trillion. Therefore, the marginal propensity to save (MPS) is 1 - MPC = 0.5.

How much is the marginal propensity to save when disposable income rises from $3 trillion to $4 trillion?

A) 0
B) .25
C) .5
D) .75
E) 1.0

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