The arithmetic value of 1 - MPS equals:
A) the marginal propensity to invest.
B) the investment multiplier.
C) the marginal propensity to consume.
D) the marginal propensity to tax.

Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is the proportion of an increase in income that is saved rather than spent on consumption. Therefore, 1 - MPS equals the marginal propensity to consume (MPC), which is the proportion of an increase in income that is spent on consumption rather than saved.

The Arithmetic Value of 1 - MPS Equals