Suppose a consumption operate is given as C = $175 + 0.85YD. The marginal propensity to avoid wasting is:
As an instance you enhance YD (yearly disposable revenue) by $1.
When this occurs consumption will increase by 85 cents since that’s the coefficient of YD.
The implication is that the rest ($1-.85) was saved.
You didn’t give say the factor you want discover. You solely gave the consumption operate and the marginal propensity to avoid wasting, however what ought to we discover?
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MPS=1-MPC=1-0.85=0.15.The reply is B.
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