TOPIC: Consumption and Saving 3. Consumption and savingSuppose Cho gets a sales bonus at her place of work that gives her an extra $700 of disposable income. She chooses to spend $560 and save theremaining $140.From this, you can tell that Cho's marginal propensity to consume (MPC) isand her marginal propensity to save (MPS) is0.80,0.80,Mathematically, it must always be true that:0.56,0.56,0.20Consumption=Disposable income-Saving,Saving-Disposable income,Disposable income+Saving0.20Or 0.14Or 0.14Therefore, it must also be true that:MPC1-MPS,1+MPS,ORMOS

The marginal propensity to consume (MPC) measures the change in consumption resulting from a change…

Answered: 3. Consumption and saving Suppose Cho…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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