ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If MPC is .9 the MPS =
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.1
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0
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1
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.9
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Explanation:
Detailed explanation-1: -If the marginal propensity to consume (MPC) is 0.90, the value of the spending multiplier is 90.
Detailed explanation-2: -MPS is a component of Keynesian macroeconomic theory and is calculated as the change in savings divided by the change in income, or as the complement of the marginal propensity to consume (MPC). The sum of MPC and MPS is equal to unity (i.e., MPC + MPS = 1).
Detailed explanation-3: -=0. 25. Was this answer helpful?
Detailed explanation-4: -Answer and Explanation: In the example, the marginal propensity to consume (MPC) is 0.5. So, the marginal propensity to save (MPS) is 0.5, too.
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