ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Understanding Marginal Propensity to Save The amount is expressed as a percentage, and a higher proportion indicates that an individual receives a higher income and hence demonstrates a greater ability to satisfy their needs. Usually, a higher income translates to a higher MPS.

Detailed explanation-2: -The amount of the marginal propensity to consume, therefore, contributes to the multiplier effect because extra income leads to extra demands and/or spending and creates more income. This increase in income because of the new injection, or spending, is the multiplier effect.

Detailed explanation-3: -A decrease in the marginal propensity to consume will increase the multiplier.

Detailed explanation-4: -Therefore, there is an inverse relationship between investment multiplier and marginal propensity to save which means if marginal propensity to save increases, investment multiplier decreases and vice-versa.