Knowee
Questions
Features
Study Tools

If entire additional income is saved then MPC is:(a). Zero (b). one(C). Infinity (d). Between 0 and 1

Question

If entire additional income is saved then MPC is:

  • (a) Zero
  • (b) one
  • (c) Infinity
  • (d) Between 0 and 1
🧐 Not the exact question you are looking for?Go ask a question

Solution

To determine the marginal propensity to consume (MPC) when the entire additional income is saved, we need to understand the concept of MPC.

MPC represents the proportion of additional income that is spent on consumption. It is calculated by dividing the change in consumption by the change in income.

In this scenario, if the entire additional income is saved, it means that none of it is spent on consumption. Therefore, the change in consumption is zero.

When the change in consumption is zero, the MPC is also zero. This means that for every additional unit of income, none of it is spent on consumption.

Hence, the answer to the question is (a) Zero.

This problem has been solved

Similar Questions

in an economy an increase in investment leads to an increase in national income 3 times more than increase in investment. calculate mpc

If the marginal propensity to save is 0.35. What is the size of the expenditure multiplier?Provide answer to one decimal point.

When economy decides to save the whole of its additional income, then value of investmentmultiplier will be

If the marginal propensity to consume is 0.7, the government-purchases multiplier is:0.3.0.7.1.4.3.3.

If a man after spending 97% of his income, saves Rs.300 per month, his annual income is :A10000B12000C36000D120000

1/1

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.