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If investment increases from 400 to 550 and income increases from 900 to 1650 the MPs should be equal to?
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If investment increases from 400 to 550 and income increases from 900 ...
Calculation of Marginal Propensity to Save (MPS)
Investment and income are key components of the economy that can help us calculate the Marginal Propensity to Save (MPS).
Investment and Income Changes:
- Initial investment: 400
- Final investment: 550
- Initial income: 900
- Final income: 1650

Formula for MPS
MPS = Change in Saving / Change in Income

Calculating Change in Saving
Change in Saving = Final Investment - Initial Investment
Change in Saving = 550 - 400
Change in Saving = 150

Calculating Change in Income
Change in Income = Final Income - Initial Income
Change in Income = 1650 - 900
Change in Income = 750

Calculating MPS
MPS = Change in Saving / Change in Income
MPS = 150 / 750
MPS = 0.2
Therefore, the Marginal Propensity to Save (MPS) in this scenario is 0.2. This means that for every additional unit of income, individuals are saving 20% of it.
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If investment increases from 400 to 550 and income increases from 900 to 1650 the MPs should be equal to?
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