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. In the nation of Foxystan, a $1000 increase in consumer spending typically causes GDP to rise by $5000. The marginal propensity to save in Foxystan is equal to

Sagot :

Answer:

Explanation:pog

Parrain

Based on the amount of consumer spending and the change in GDP, the Marginal propensity to Save is 0.20

First find the GDP multiplier:

= Change in GDP/ Change in spending

= 5,000 / 1,000

= 5

The multiplier is also calculated as:

Multiplier = 1 / Marginal propensity to save

5 = 1 /  MPS

MPS x 5 = 1

MPS = 1/5

= 0.2

In conclusion, the MPS is 0.2

Find out more on Marginal Propensity to Save at https://brainly.com/question/17930875.

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