The sum of the marginal propensity to consume and the marginal propensity to save is always equal to
A)zero.
B)0.5.
C)1.
D)100.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of additional income that is spent, while the marginal propensity to save (MPS) is the fraction of additional income that is saved. Since all additional income must either be spent or saved, the sum of MPC and MPS must be equal to 1.

The Sum of the Marginal Propensity to Consume and the Marginal