The marginal propensity to consume plus the marginal propensity to save
A) equals 0.
B) equals 0.75.
C) equals 1.
D) is always a negative number.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of each additional dollar of income that is spent on consumption. The marginal propensity to save (MPS) is the fraction of each additional dollar of income that is saved. The MPC + MPS always add up to 1, because every dollar of income is either spent or saved. Therefore, the correct answer is C.

The Marginal Propensity to Consume Plus the Marginal Propensity to Save