Marginal propensity to consume + Marginal propensity to save = ______.

Zero

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One

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Two

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Minus one

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Solution

The correct option is C One
The marginal propensity to consume is the portion of each extra dollar of a household's income used in extra expenditure whereas marginal propensity to save is the portion of each extra dollar of a household's income used for saving. Thus, they balance each other well. Hence, marginal propensity to consume + marginal propensity to save is equal to one.

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