3. a) Refer to the above data. The marginal propensity to consume is:(15 Pnts) A. 25 B..75 C. 20 D. .80 b) Refer to the above data. At the $200 level of disposable income A,the marginal propensity to save is 2% percent B. dissaving is $5. C. the average propensity to save is 20 D. the average propensity to consume is 80 e) Refer to the above data. If disposable income was $325, we would expect consumption to be: A. $315. B. $305 C. $20 D. $290 Answer the next question/s) on the basis of the following data for a hypothetical economy Disposable Income Saving -$10 $o 50 100 150 200 10 20 30 4. a) Refer to the above data. The marginal propensity to consume is: (15 Points) A. 80 B..75 C 20 D .25

## Answer

3) a) The answer is D-) 0.8 Because MpC= change in consumption/chnage in Income MPC= 20/25=0.8 B) The answer is B-) Dissaving is $5 Because consumption is $5 extra from disposable income. Therefore it is dissaving. C) The answer is B) $305 Because change in consumption is 20 for every increase in income of $25. So consumption 285+20=$305.

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