The fraction of additional income that is saved is called:

Question

Quizplus · Accepted Answer

The fraction of additional income that is saved is known as the marginal propensity to save (MPS). It represents the proportion of each additional dollar of income that is saved rather than spent on consumption. The marginal propensity of income (MPI) represents the change in income associated with a change in spending, while the marginal propensity to consume (MPC) represents the proportion of each additional dollar of income that is spent on consumption. Average consumption is simply the total amount of consumption divided by the number of individuals or households. Therefore, the correct answer is C, as it represents the specific fraction of additional income that is saved.

The Fraction of Additional Income That Is Saved Is Called