73. If a household's income falls from $26,000 to $24,000 and it's savings fall from $1000...
73. If a household's income falls from $26,000 to $24,000 and it's savings fall from $1000 to $500 the it's
a- marginal propensity to consume is 0.98
b- marginal propensity to consume is 1.33
c- marginal propensity to consume 0.25
d- marginal propensity to save is 0.02
e- marginal propensity to save is 0.25
Homework Answers
Answer
marginal propensity to save =(change in the saving /change in income)
=(1000-500)/(26000-24000)
=0.25
marginal propensity to consume=1-marginal propensity to save =1-0.25
=0.75
Option e
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