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