If the MPC is 0.6 and the APC is 0.9, the MPS equals 0.2. MPS plus...
If the MPC is 0.6 and the APC is 0.9, the MPS equals 0.2. MPS plus MPC equals 1. So MPS must be equal to 0.2. The MPC and MPS always add to be 1. Separately, neither MPC nor MPS can be less than 0 or greater than 1. 0.4. 1.7. 0.8
Homework Answers
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ANswer a) 1
Neither MPC nor MPS can be less than 0 or greater than
1
MPC+ MPS = 1
Marginal propensty to consume can never be greater than 1 as
additional consumption cannot be greater than additional
income
Similarly, marginal propensity to save can never be greater than 1
as the additional savings cannot be greater than additional income
.
When MPC is 0.6 , MPS is 1-0.6 = 0.4
MPS is not 0.2 .
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If the MPC is 0.6 and the APC is 0.9, the MPS equals 0.2. MPS
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