In an economy, for every $1,600 decrease in income, spending falls by $1,200. It can be concluded that the

Name: In an economy, for every $1,600 decrease in income, spending falls by $1,200. It can be concluded that the
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The marginal propensity to save (MPS) is the fraction of an additional dollar of disposable income that is saved. If spending falls by $1,200 for every $1,600 decrease in income, then $400 is saved ($1,600 - $1,200), making the MPS = $400 / $1,600 = 0.25.

In an Economy, for Every $1,600 Decrease in Income, Spending