Economics:
Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
Question
Chapter 9, Problem 10E
To determine

(a)

To write:

Disposable income rises by $100, and consumption by $75. The value of marginal propensity to consume.

To determine

(b)

To write:

Disposable income falls by $100 and consumption falls be $50. The value of marginal propensity to consume.

To determine

(c)

To write:

Savings is $20 when disposable income is $100; savings is $40 when disposable income is $300. The value of marginal propensity to consume.

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Explain why the marginal propensity to save and the marginal propensity to consume sum to 1.
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