What are the marginal propensity to consume (MPC) and the marginal propensity to save (MPS)? How is the MPC related to the consumption function?
The marginal propensity to consume is the change in consumption divided by the change in income. The
marginal propensity to save is the change in saving divided by the change in income. The MPC is constant
if the consumption curve is a straight line. The MPS measures the slope of the saving function and is
constant along a linear saving function.
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a. True b. False
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