The marginal propensity to save is
A) total saving divided by the change in disposable income.
B) the change in saving divided by the change in consumption expenditure.
C) total saving divided by total disposable income.
D) the change in saving divided by the change in disposable income.

Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) measures the change in saving resulting from a change in disposable income. It is calculated by dividing the change in saving by the change in disposable income, making choice D the correct answer. Choice A is incorrect because it calculates the average propensity to save (APS), which is total saving divided by total disposable income. Choice B is incorrect because it calculates the marginal propensity to consume (MPC), which is the change in consumption expenditure divided by the change in disposable income. Choice C is also incorrect because it calculates the APS, not the MPS.

The Marginal Propensity to Save Is