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WAEC Economics 1998 Question 30

Question 30

National Income

An increase in marginal propensity to save will lead to

  1. A.an increase in marginal propensity to consume
  2. B.a decrease in the level of consumption
  3. C.an immediate decrease in the net national income
  4. D.an increase in the level of consumption
  5. E.a decrease in the level of savings
Show the answer and explanation

Answer: B (a decrease in the level of consumption)

Explanation

MPC + MPS = 1, so if people save more of each extra naira they consume less.