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If marginal propensity to save equals 0
If marginal propensity to save equals 0.50, then the marginal propensity to consume is:
1) 1.25.
2) 0.50. 3) 0.70. 41 1.00.
Expert Solution
Answer
So, the correct option is 2nd "0.50".
Explanation
Computation of Marginal Propensity to Consume:
Marginal Propensity to Consume + Marginal Propensity to Save = 1
Marginal Propensity to Consume + 0.50 = 1
Marginal Propensity to Consume = 1 - 0.50
Marginal Propensity to Consume = 0.50
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