The marginal propensity to save is the increase in household savings when _____ increase(s) by $1.

Name: The marginal propensity to save is the increase in household savings when _____ increase(s) by $1.
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Question

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The marginal propensity to save (MPS) is the change in savings divided by the change in disposable income. Therefore, when disposable income (the amount of income available to households after taxes) increases by $1, the MPS measures the increase in savings by households.

The Marginal Propensity to Save Is the Increase in Household