A decrease in transfer payments will have a smaller effect on aggregate demand the:

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The marginal propensity to save (MPS) is the fraction of an increase in income that is saved rather than spent. A larger MPS means that individuals are more likely to save in response to a decrease in transfer payments, which will have a smaller effect on aggregate demand. Therefore, when the MPS is larger, there will be a smaller multiplier effect with regard to changes in income and consumption as a result of changes in transfer payments.

A Decrease in Transfer Payments Will Have a Smaller Effect