GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumption / Income
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Saving / Income
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Change in Consumption / Change in Income
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Change in Saving / Change in Income
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Detailed explanation-1: -Marginal propensity to save (MPS) is an economic measure of how savings change, given a change in income. It is calculated by simply dividing the change in savings by the change in income. A larger MPS indicates that small changes in income lead to large changes in savings, and vice-versa.
Detailed explanation-2: -Or mathematically, the marginal propensity to save (MPS) function is expressed as the derivative of the savings (S) function with respect to disposable income (Y).
Detailed explanation-3: -MPS is a component of Keynesian macroeconomic theory and is calculated as the change in savings divided by the change in income, or as the complement of the marginal propensity to consume (MPC). The sum of MPC and MPS is equal to unity (i.e., MPC + MPS = 1).