If a $5,000 increase in income leads to additional savings of $1,250,the marginal propensity to consume is1.330.254O 0.75 Which statement concerning consumption is NOT correct?O Consumption represents 70% of the GDP in the United States.Keynes believed that as income rises, consumption will rise, but not asfast as income.O An increase in consumption implies an increase in savings.O Expectations about future prices and incomes determine consumption.

Marginal propensity to save refers to the ratio of change in saving to change in income :-

Answered: If a $5,000 increase in income leads to…

If a $5,000 increase in income leads to additional savings of $1,250, the marginal propensity to consume is 1.33 0.25 4 O 0.75

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 6E

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Question

If a $5,000 increase in income leads to additional savings of $1,250,
the marginal propensity to consume is
1.33
0.25
4
O 0.75

Which statement concerning consumption is NOT correct?
O Consumption represents 70% of the GDP in the United States.
Keynes believed that as income rises, consumption will rise, but not as
fast as income.
O An increase in consumption implies an increase in savings.
O Expectations about future prices and incomes determine consumption.

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