Which of the following depicts the actual meaning of marginal propensity to save (MPS)? Option 1: It is the savings per unit of income. Option 2: It is the consumption per unit of income. Option 3: It is the change in consumption per unit change in income. Option 4: It is the change in savings per unit of change in income.

Answer: It is the change in savings per unit of change in income. Solution: MPS is defined as the change in savings resulting from a unit change in income: MPS = ( S)/( Y). Savings per unit of income is APS, and change in consumption per unit change in income is MPC. Hence option 4 is correct.

Macro

Income & Employment

Easy

Which of the following depicts the actual meaning of marginal propensity to save (MPS)?

It is the savings per unit of income.

It is the consumption per unit of income.

It is the change in consumption per unit change in income.

It is the change in savings per unit of change in income.

✅ Correct Option: 4

MPS is defined as the change in savings resulting from a unit change in income: $MPS = \frac{\Delta S}{\Delta Y}$ . Savings per unit of income is APS, and change in consumption per unit change in income is MPC. Hence option 4 is correct.

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Which of the following depicts the actual meaning of marginal propensity to save (MPS)?

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