Homework Answers
Answer
a)
Marginal propensity to consume =change in consumption /change in
disposable income
=(193.75-175)/(225-200)
=0.75
=(235-193.75)/(280-225)
=0.75
and so on
the MPC is contant over the years and it is 0.75
=====
b)
MPS=1-MPC
=1-0.75
=0.25
the MPS is 0.25
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