Question

24.If the MPC is 0.8 and the APC is 0.9, the MPS equals

A. 0.1.
B. 1.7.
C. 0.2.
D. 0.8

Answer 1

The MPS (Marginal Propensity to Save) is equal to 1 minus the MPC (Marginal Propensity to Consume).

So, if the MPC is 0.8, then the MPS is 0.2 [1-0.8=0.2].

Given that the APC (Average Propensity to Consume) is 0.9, we can also say that the APS (Average Propensity to Save) is 0.1 [1-0.9=0.1].

Therefore, the answer is C. 0.2.