The marginal propensity to save equals the
A) average amount of income saved.
B) change in savings from a change in consumption expenditure.
C) ability to save the same percentage of income each month.
D) change in savings resulting from a one dollar change in disposable income.

Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) measures the change in savings resulting from a one dollar change in disposable income. Therefore, choice D is the correct answer. Choice A is incorrect because it refers to the average amount of income saved, not the change in savings resulting from a change in income. Choice B is partially correct as it refers to the change in savings resulting from a change in consumption expenditure, but it is not the definition of MPS. Choice C is incorrect as it refers to the ability to save the same percentage of income each month, not the change in savings resulting from a change in income.

The Marginal Propensity to Save Equals the