The sum of the marginal propensity to save and the marginal propensity to consume
A)always equals 1.
B)sometimes equals 1.
C)always equals 0.
D)never equals 1.
E)is greater than zero but less than 1.

Question

Quizplus · Accepted Answer

The sum of the marginal propensity to save and the marginal propensity to consume always equals 1 because any additional income must either be saved or consumed. Therefore, the sum of the probabilities of these two options must equal 1.

The Sum of the Marginal Propensity to Save and the Marginal