Answer to Question #65262 in Macroeconomics for Kaylee Deuaye

Question #65262

If disposable income decreases from $6000 to $5000 and MPC equals .80, how much is savings decreased?

Expert's answer

If MPC=0.8, then MPS=1-MPC=0.2 and the disposable income decreased by $6000-$5000=$1000. That`s why the savings decreased by 0.2*$1000=$200.

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