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Given the consumption function of an economy C = 200 + 0.25 Y, what is the value of slope of the savings function ?

Solution

Correct Option: 3

Slope of consumption function (MPC) = 0.25.

Slope of savings function (MPS) = 1 - MPC = 1 - 0.25 = 0.75.

Hence slope of savings function is 0.75.

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