Based on our understanding of consumption and saving,we know that the marginal propensity to consume and the marginal propensity to save must

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) and the marginal propensity to save (MPS) are two components of the marginal propensity to spend (MPS+MPC=1), which indicates how much of an increase in income is spent and saved respectively. Therefore, as all income either goes towards consumption or saving, MPC and MPS must sum up to exactly one.

Based on Our Understanding of Consumption and Saving,we Know That