Question : The marginal propensity to save (MPS) is defined as the:
Option 1: Proportion of income that is saved
Option 2: Proportion of income that is consumed
Option 3: Proportion of income that is taxed
Option 4: Proportion of income that is invested
Correct Answer: Proportion of income that is saved
Solution : The correct answer is (a) Proportion of income that is saved.
It represents the change in savings resulting from a change in income. The MPS indicates how much of an additional unit of income is saved rather than spent on consumption. For example, if the MPS is 0.2, it means that for every additional dollar of income, 20 cents will be saved.
Question : The marginal propensity to consume (MPC) is defined as the:
Question : The marginal propensity to save (MPS) is the proportion of an additional:
Question : The marginal propensity to consume (MPC) is the proportion of an additional:
Question : _____________________ is defined as ratio of change in consumption to change in total income
Question : __________________________ refers to the consumption expenditure to the corresponding level of income.
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile