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.
