The marginal propensity to save is the increase in household savings when investment spending increases by $1.

Name: The marginal propensity to save is the increase in household savings when investment spending increases by $1.
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Question

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The definition given in the statement is incorrect. The marginal propensity to save is the proportion of each additional dollar of income that is saved rather than spent. It is calculated by dividing the change in savings by the change in income.

The Marginal Propensity to Save Is the Increase in Household