Question

Suppose Naomi gets a sales bonus at her place of work that gives her an extra $600 disposable income. She chooses to spend $360 and save the remaining $240. From this, you can tell that Winona's marginal propensity to save (MPS) is _____

Answer 1

Marginal propensity to save is calculated by dividing the amount you save by the total amount you received as a bonus.

Naomi saved $240 out of her extra $600. Divide 240 by 600:

$240 \div 600 = 0.4$

Naomi's MPS is 0.4.