Suppose you get $500 for your birthday. you spend $400 and save the remaining $100. hence, the marginal propensity to save or mp

Question

Andrej [43]

2 years ago

7

Suppose you get $500 for your birthday. you spend $400 and save the remaining $100. hence, the marginal propensity to save or mp

s is equal to:_______

Business

1 answer:

Makovka662 [10] · Answer 1 · 2023-04-08T07:09:05+03:00

Assuming that you received $500 for your birthday, spent $400 of it, and saved the remaining $20. There are 20 MPs, or marginal propensities to save.

MPS= change in savings/change in income. A change in income of $500 changes savings by $20

<h3 /><h3>Why Do People Have a Marginal Propensity to Consume?</h3>

The opposite of MPS is the marginal propensity to consume (MPC). The link between income and consumption is quantified with the aid of MPC.
By dividing the change in spending by the change in income, one can determine their marginal propensity to consume.
In order to calculate how much spending rises for every dollar of increased income, MPC measures this relationship.

To learn about more Marginal propensity, visit:

brainly.com/question/13957387

#SPJ4