Question: When a $ 2 , 0 0 0 increase in income causes a $ 1 , 7 5 0 increase in consumption spending: Question 1

When a $2,000 increase in income causes a $1,750 increase in consumption spending:
Question 1 options:
a)
the marginal propensity to save (MPS) is 0.20.
b)
the marginal propensity to consume (MPC) is 0.80.
c)
the marginal propensity to consume (MPC) is 0.875
d)
then MPC - MPS =1.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!