Marginal propensity to save is equal to the change in ____ divided by the change in ____.
A)consumption spending; total income
B)saving; total income
C)saving; disposable income
D)consumption spending; disposable income

Question

Marginal propensity to save is equal to the change in ____ divided by the change in ____.
A)​consumption spending; total income
B)​saving; total income
C)​saving; disposable income
D)​consumption spending; disposable income

Quizplus · Accepted Answer

The marginal propensity to save measures the change in saving that results from a change in disposable income. Therefore, it is equal to the change in saving divided by the change in disposable income. Option A is incorrect because it measures consumption spending, not saving. Option B is incorrect because it measures the change in saving in relation to total income, which does not account for taxes and other deductions. Option D is incorrect because it measures consumption spending in relation to disposable income, not saving.

Marginal Propensity to Save Is Equal to the Change in ____