1.

Define Marginal Propensity to Save (MPS).

Answer»

Marginal Propensity to Save (MPS):

Marginal Propensity to Save is the ratio of change in saving to a change in income. MPS is obtained by dividing change in savings by change in income. It can be expressed algebraically as

MPS = ΔS/ΔY

ΔS = Change in Saving;

.ΔY = Change in Income

Since MPC + MPS = 1

MPS = 1 – MPC and MPC = 1 – MPS



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