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22 March, 12:01

Suppose disposable income increases by $ 2,000. As a result, consumption increases by $ 1,500. Answer the questions based on this information. Where appropriate, enter your answer as a decimal rather than as a percent

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  1. 22 March, 12:21
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    Increase in savings resulting directly from the given change in income

    = increase in income - increase in consumption = $2000-$150 = $500

    Marginal propensity to save = increase in savings/increase in income = 500/2000 = 0.25
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