If your MPS is 0.60 that means that:
A) for every dollar increase in your disposable income, consumption will decrease by 60 cents.
B) for every dollar decrease in your disposable income, consumption will increase by 60 cents.
C) for every dollar increase in your disposable income, consumption will increase by 60 cents.
D) for every dollar increase in your disposable income, consumption will remain unchanged.

Question

Quizplus · Accepted Answer

MPS (marginal propensity to save) represents the proportion of disposable income that is saved rather than consumed. Therefore, if MPS is 0.60, it means that for every dollar increase in disposable income, 60 cents will be saved and 40 cents will be consumed. Hence, consumption will increase by 60 cents for every dollar increase in disposable income.

If Your MPS Is 0.60 That Means That