The marginal propensity to save refers to the
A)total saving divided by a change in income.
B)additional saving that occurs out of an additional dollar of income.
C)additional saving that occurs over time.
D)additional saving that occurs out of an additional dollar of investment.
E)change in saving divided by total income.

Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) refers to the additional saving that occurs out of an additional dollar of income, therefore, option B is the correct answer. Option A refers to the average propensity to save, option C is not related to the concept of marginal propensity to save, option D refers to the marginal propensity to invest, and option E is the change in saving divided by total income, which is not the same as the MPS.

The Marginal Propensity to Save Refers to the