The arithmetic value of (1 - MPC) equals
A) APC.
B) MPS.
C) APS.
D) NDP.

Question

Quizplus · Accepted Answer

The arithmetic value of (1 - MPC) is equivalent to the marginal propensity to save (MPS), which represents the proportion of additional income that is saved rather than consumed. This equation is derived from the basic macroeconomic identity that states that total income equals total spending, which can be expressed as Y = C + S, where Y is income, C is consumption, and S is savings. Rearranging this equation, we get S = Y - C, and taking the derivative of this equation with respect to income, we obtain dS/dY = 1 - MPC, which is the MPS. Therefore, the answer is B, MPS.

The Arithmetic Value of (1 - MPC) Equals