The marginal propensity to save (MPS) is
A) the increase in saving per dollar increase in disposable income.
B) total saving divided by total consumption expenditure.
C) the decrease in saving per dollar increase in consumption expenditure.
D) the decrease in saving that is caused by inflation.

Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) measures the change in saving that occurs in response to a change in disposable income. It is expressed as the ratio of the change in saving to the change in disposable income. Therefore, choice A is the correct answer as it defines the MPS. The other options are not relevant to the definition of the MPS.

The Marginal Propensity to Save (MPS) Is