MPC + MPS = 1View attachment 32124
Could someone help me with this ?
Isnt their income 40,000+ 160,000??MPC + MPS = 1
0.75 + MPS = 1 therefore MPS = 0.25
In year 2 their income is: $40,000 + $90,000 = $130,000
So to calculate how much they save in Year 2 do: 0.25 x $130,000 which is $32,500
I think I made a mistake, so if they had $160000 at the beginning and consumed $90000, they should have $70000 left over right?Isnt their income 40,000+ 160,000??
Ohhh I’m not sure tbh I had that question in my test today and I thought I did it right but after looking at my working out it wasn’t correct.I think I made a mistake, so if they had $160000 at the beginning and consumed $90000, they should have $70000 left over right?
So shouldn't it be $40000 + $70000?
mps is for every extra dollar earned, not on average. if it was apc youd be correct. instead you do mps=1-.75=.25. mps x 40,000 = 10,000.You add this new saving to the already saved 160,000-90,000 = 70,000 so you get 80000I think I made a mistake, so if they had $160000 at the beginning and consumed $90000, they should have $70000 left over right?
So shouldn't it be $40000 + $70000?
Yep, this is correct.mps is for every extra dollar earned, not on average. if it was apc youd be correct. instead you do mps=1-.75=.25. mps x 40,000 = 10,000.You add this new saving to the already saved 160,000-90,000 = 70,000 so you get 80000