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73. If a household's income falls from $26,000 to $24,000 and it's savings fall from $1000...

73. If a household's income falls from $26,000 to $24,000 and it's savings fall from $1000 to $500 the it's

a- marginal propensity to consume is 0.98

b- marginal propensity to consume is 1.33

c- marginal propensity to consume 0.25

d- marginal propensity to save is 0.02

e- marginal propensity to save is 0.25

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Answer #1

Answer

marginal propensity to save =(change in the saving /change in income)

=(1000-500)/(26000-24000)

=0.25

marginal propensity to consume=1-marginal propensity to save =1-0.25

=0.75

Option e

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