Homework Answers
a. MPC+MPS =1,
We need to calculate MPC = slope = change in consumption at Y = 36,
Change in consumption = (C2-C1)/(Y2-Y1) = 0.17
| Y | C | MPC | MPS |
| 35.00 | 61.83 | ||
| 36.00 | 62.00 | 0.17 | 0.83 |
MPC = 0.17 means, Peterson's family has 17% propensity to consume for evey 1$ income increase
b. MPS = 1-MPC = 0.83, means Peterson's family has 83 % propensity to save for evey 1$ income increase
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