Question

Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging and other expenses. So far, she has managed to save $20,000. What is her marginal propensity to save (MPS)

Answer 1

Answer:

the mps is 0.10

Explanation:

Given that

Income increased from $3,000 to $3,500 per month

ALso she saved 10% and spend the remaining on other expenses

So, she saved $20,000

Now the marginal propensity to consume is

As we know that

MPS = change in saving ÷ change in income

So put the values

After putting out the values, the mps is 0.10