If an editorial says that Americans are saving at loweramounts ie, 20 years ago

Question

If an editorial says that Americans are saving at loweramounts ie, 20 years ago the average savings rate was 20% ofdisposable income.  The editorial predicted that thiswould drop to 5 percent in less than five years. I need to calculate the marginal propensity to consume afterthe change in the rate of savings. If an editorial says that Americans are saving at loweramounts ie, 20 years ago the average savings rate was 20% ofdisposable income.  The editorial predicted that thiswould drop to 5 percent in less than five years. I need to calculate the marginal propensity to consume afterthe change in the rate of savings.

Explanation / Answer

Well, you know that MPC+MPS=1, or MPC=1-MPS, since you can eitherconsume or save that dollar that you have. So, you can see that adecrease of X% in MPS will equal an increase of X% in MPC.

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